Week Ahead – Fed and BoE rate hikes on the horizon; will RBA join in?
XM Group | Apr 29, 2022 08:52AM ET
Fed to begin front-loading rate hikes
As the US dollar scales multi-year highs against its rivals, traders will have their hands full next week with a barrage of data accompanying the crucial FOMC meeting. The ISM manufacturing PMI will kick things off on Monday but is unlikely to be a threat to USD bulls as it’s forecast to edge up from 57.1 to 58.0 in April. March factory orders will follow on Tuesday and on Wednesday, the JOLTS job openings and ADP employment reports are due, along with the ISM non-manufacturing PMI. Like the manufacturing sector, the services part of the US economy is not expected to display any signs of slowdown just yet as the non-manufacturing PMI is projected to improve to 59.0.
On Friday, the latest payrolls figures are not anticipated to cause any worries either. Nonfarm payrolls are expected to grow by a solid 400k in April, though the unemployment rate is predicted to hold steady at 3.6%. Average hourly earnings are forecast to rise by 0.4% month-on-month.
With both central banks flagging further hefty rate increases ahead on the back of soaring inflation, the jobs figures are not anticipated to materially alter the policy outlook, so unless there are any major surprises, such as stronger wage growth, the Canadian and New Zealand dollars’ best chance of a rebound is a pullback in the greenback.
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