Week Ahead – US GDP and BoJ decision on top of next week’s agenda
XM Group | Apr 19, 2024 08:18AM ET
- US GDP, core PCE and PMIs the next tests for the dollar
- Investors await BoJ for guidance about next rate hike
- EU and UK PMIs, as well as Australian CPIs also on tap
- Earnings season heats up as tech giants report Will US data throw more Fed rate cuts off the table?
The dollar staged a strong recovery the last couple of weeks, with the bulls being encouraged to initiate long positions as soon as the US CPI data revealed that inflation in the world’s largest economy reaccelerated in March.
With several Fed policymakers, including Chair Powell, signaling in the aftermath of the release that there is no urgency to ease monetary policy soon, and with retail sales coming in much stronger than expected on Monday, investors further reduced the amount of rate cuts they expect for this year. They are now expecting interest rates to be lowered by only 42bps, far fewer than the Fed’s own projections of 75.
The monthly seasonally adjusted y/y rate rebounded somewhat in March, but this was after it declined notably in February from January, which means that, overall, inflation may have continued cooling in Q1. This could increase the likelihood for a 25bps RBA rate cut by December.
Tech earnings enter the spotlight as well
On Wall Street, all three of its major indices have been in a corrective phase lately due to increasing tensions in the Middle East and due to the diminishing Fed rate cut expectations.
That said, besides those two major themes, equity investors are likely to also keep their attention locked on the earnings season as several high-growth tech giants announce their results next week. On Tuesday, the spotlight will fall on Alphabet (NASDAQ:GOOGL) and Tesla (NASDAQ:TSLA), while on Wednesday, it will be Meta’s turn. On Thursday, the torch will be passed to Microsoft (NASDAQ:MSFT) and Amazon (NASDAQ:AMZN).
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