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The UK, US and the Eurozone in the week ahead

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  • US Federal Reserve rate decision
  • Bank of England monetary policy meeting
  • US Non-Farm Payrolls

It’s a very significant week with important rate decisions from US, UK and Australian central banks. We also have the latest update on US Non-Farm Payrolls while the first quarter corporate earnings season continues. The main companies providing updates this week include Advanced Micro Devices, Pfizer, Airbnb, Starbucks, Uber, and Alibaba.

Monday 2nd May

Chinese banks are closed in observance of Labour Day and there’s a Bank Holiday for the United Kingdom as well. Then we have a stack of second division data points from the Euro zone, including updates for Manufacturing PMIs and German Retail Sales. The most important data release for the day is the US ISM Manufacturing PMI. This continues to register expansion with last month’s number coming in at 57.1, substantially above the neutral expansion/contraction 50 level. However, last month’s number came in lower than expected and the whole data series has been trending lower over the last twelve months. In April 2021 it stood at 64.7.

Arista Networks is the most significant first quarter earnings update.

Tuesday 3rd May

 There are Bank Holidays for China and Japan. We start the day with the latest monetary policy decision from the Reserve Bank of Australia (RBA) and an accompanying statement. The RBA is expected to keep its headline Cash Rate unchanged at 0.10%. From the Euro zone we have the Unemployment Rate, PPI, Eurogroup meetings, German Unemployment Change and the French Government Budget Balance. From the UK we have the Construction PMI and Final Manufacturing PMI. The latter continues to indicate expansion, but this too has been trending lower since last summer. From the US we have JOLTS Job Openings and Factory Orders. Overnight the Reserve Bank of New Zealand releases its Financial Stability Report, and we also get the country’s latest unemployment data.

Key US corporate earnings reports come from Pfizer, Activision Blizzard, Advanced Micro Devices, Airbnb, and Starbucks Corp

Wednesday 4th May

Again, there are Bank Holidays for China and Japan. We then have another clutch of second-division economic data from the Euro zone, this time focused on Services PMIs with Eurozone Retail Sales for good measure. From the UK we have updates on the M4 Money Supply, Mortgage Approvals, and Net Lending to Individuals. From the US we have the ADP Non-Farm Employment Change number. This measures payrolls from the private sector and comes two days ahead of the official Non-Farm Payroll numbers. It tends to be far less volatile than the official data, and is a poor guide to how the later numbers may come in. But if there is a big miss from expectations, that can foreshadow something similar with Friday’s Non-Farms. Then we have the ISM Services data and weekly Crude Oil Inventories. But the highlight of the day is the culmination of the two-day Federal Reserve FOMC meeting. The Fed is expected to raise its key fed funds rate by 50 basis points, although some analysts believe they could hike by as much as 75 basis points, or three quarters of 1%. The central bank will also release its statement and then Fed chair Jerome Powell will hold a press conference. Investors will be listening out for any signs that the Fed is prepared to raise rates aggressively over the next two meetings, and hear what it has to say on reducing its balance sheet.

First quarter earnings reports include Barrick Gold, Lumentum Holdings, Moderna, Twilio and Uber Technologies

Thursday 5th April

There is another Bank Holiday in Japan. Overnight we see the release of Australian Building approvals and Trade Balance. From China we have the Caixin Services PMI while from the Euro zone we have German Factory Orders and French Industrial Production. There are also an OPEC/non-OPEC ministerial meeting. The Bank of England releases its Monetary Policy Report and rate decision. It has raised its Official Bank Rate by 25 basis points at each of its last three monetary policy meetings as it desperately works to put a lid on inflation, which, as in other parts of the world, has proved to be anything but transitory. From the US the key data is weekly Jobless Claims. This takes on a little more importance than usual coming one day before the latest Non-Farm Payroll release.

Key earnings reports come from Ball Corp, Fiverr International, Shopify, Block Inc, Illumina, Lucid Group and Virgin Galactic

Friday 6th May

Rounding off a busy week on the economic events calendar, overnight sees the release of the Reserve Bank of Australia’s Monetary Policy Statement. This is followed by German Industrial Production and French Private Payrolls. From the UK we have the Halifax House Price Index and Construction PMI. Later in the afternoon we have Canada’s unemployment update followed by US Non-Farm Payrolls, the latest Unemployment Rate and Average Hourly Earnings. The latter figure has gained importance of late as it plays straight into inflation expectations. But it is the headline payroll number, plus any revisions to prior data that will initially move markets. This data set has proved to be quite volatile so far this year, with last month’s number undershooting expectations. But this was cancelled out by upside revisions to the two prior readings. The key US earnings report comes from China’s Alibaba.

David Morrison is an Analyst with Trade Nation. Trade Nation was set up with the specific remit to help customers realise their trading goals by changing the way they engage with the financial markets. As well as providing full transparency and making sure all customers get a fair deal, Trade Nation is fully regulated. This means customers can be confident they’re getting the trading experience they deserve. Visit www.tradenation.com to find out more

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This article does not constitute investment advice. Do your own research or consult a professional advisor.

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