After a series of economic data that did not bring any major surprises in the last month, the coming week promises to be a period full of turbulence, especially for the US dollar, Canadian dollar and euro exchange rates. On Wednesday, we await CPI inflation readings from the US, as well as the Bank of Canada's interest rate decision. The European Central Bank will announce its decision on Thursday. In addition, the first banks will report their financial results for the first quarter of this year, which will give us a better understanding of the situation in this key sector of the US economy.
Table of contents:
- US consumer price index (CPI) annualised (March)
- Interest rate decision in Canada
- Eurozone interest rate decision
- Stocks to watch
Wednesday, 10.04, 14:30 CET, US consumer price index (CPI) annualised (March)
The CPI monitors changes in the prices of consumer goods and services. The CPI is an important indicator because it helps us to understand trends in consumers' purchases and the impact of inflation on their purchasing power. It is calculated on the basis of a basket representing typical consumer spending, covering various categories such as food, housing, transport, etc. Regular measurements of the CPI allow us to track how the prices of these products and services change over time. A positive CPI indicates an overall increase in the prices of goods and services.
On the other hand, a negative CPI means that prices are lower than the year before. It is an important tool for economists and policymakers to help them understand the impact of inflation on the economy and take appropriate action. For consumers, it is information about how their money is losing value in the context of rising or falling prices, allowing them to adjust spending, plan savings and make financial decisions.
The annual rate of inflation in the US unexpectedly rose to 3.2 per cent in February 2024, up from 3.1 per cent, exceeding forecasts that had assumed inflation would continue. Housing and fuel prices were responsible for 60 per cent of this increase. On the other hand, core inflation, which excludes food and energy prices due to their volatility, cooled from 3.9 to 3.8 per cent.
The current analyst forecast is for CPI inflation to remain at 3.2 per cent in March.
Source: Tradingeconomics.com
A higher-than-expected reading could have a bullish impact on the USD, while a lower-than-expected reading could be bearish for the USD.
Impact: USD
Wednesday, 10.04, 15:45 CET, interest rate decision in Canada
At its March meeting, the Bank of Canada decided to keep interest rates at 5 per cent and declared further sales of bank assets due to concerns over the inflation outlook. The latest figures show that CPI inflation fell to 2.9 per cent in January, with the Bank of Canada forecasting that inflation will remain close to 3 per cent in the first half of the year before starting to gradually decline. The main problems that Canada's economy is currently facing are, weak GDP growth and slower employment growth compared to population growth. Despite this, Governor Macklem said at a press conference that it was too early to consider lowering interest rates, pointing to the need for a longer period for inflation to approach the 2 per cent target.
The current analyst forecast is for the Bank of Canada to keep interest rates at 5 per cent.
Source: Tradingeconomics.com
A higher-than-expected interest rate could be bullish for CAD, while a lower-than-expected interest rate could act bearishly on CAD.
Impact: CAD
Thursday, 11.04, 14:15 CET, Eurozone interest rate decision
At its March meeting, the Council of the European Central Bank decided to keep interest rates unchanged at 4.5 per cent. It argued this in response to changing market expectations for monetary policy, better-than-expected data from the global economy and higher-than-expected inflation in the euro area and the US. It acknowledged that despite economic challenges, such as weak GDP and employment growth in the euro area, monetary policy would remain dependent on upcoming data. The Council emphasised in the communication the need for patience and caution in its approach to future decisions.
The current analysts' forecast is for the European Central Bank to maintain interest rates at 4.5 per cent.
Source: Tradingeconomics.com
A higher-than-expected interest rate could be bullish for the EUR, while a lower-than-expected interest rate could act bearishly on the EUR.
Impact: EUR
Stocks to watch
JPMorgan (JPM) announces financial results for the quarter ending March 2024 Forecast EPS: 4.24 Positive earnings surprise in 7 of last 10 reports.
Deadline: Friday, 12 April.
Wells Fargo&Co (WFC) Announces financial results for the quarter ending March 2024 Forecast EPS: 1.1 Positive earnings surprise in 9 of the last 10 reports.
Deadline: Friday, 12 April.
BlackRock (BLK) Announces financial results for the quarter ending March 2024 Forecast EPS: 1.1 Positive earnings surprise in 9 of the last 10 reports.
Deadline: Friday, 12 April.
Grzegorz Dróżdż, CAI MPW, Market Analyst of Conotoxia Ltd. (Conotoxia investment service)
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
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