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Ahead of the game: 5 April 2024

Your weekly financial calendar for market insights and key economic indicators.

Source: Bloomberg

US stock markets tumbled this week as rising geopolitical tensions and more hawkish Fed speak raised questions around the scope and depth of possible Fed rate cuts.

After striking a fresh record high early in the week, the ASX 200 erased all of last week’s gains and more as rising geopolitical tensions and headwinds from Wall Street weighed on the local market.

  • Fed Chair Powell maintained cautious rate cut guidance, contrasted by other more hawkish Fed members in the US
  • Wall Street's heightened anxiety reflected in the VIX index spiking over 25% after a tumultuous week
  • Crude oil prices leapt over 4%, surpassing $86 for the first time since last October
  • Gold hit new highs above $2300 amid escalating geopolitical tensions
  • The ISM manufacturing PMI climbed to 50.3 in March, marking its first expansion in over a year
  • March's ADP report indicated a private sector gain of 184k jobs, surpassing the 150k forecast
  • Euro Area inflation rose to 2.4% YoY in March, with the core rate at its lowest since February 2022
  • Factory Orders rebounded 1.4% in February, correcting a previous 3.8% decline
  • The ISM services PMI dipped to 51.4, slightly below the anticipated 52.8
  • JOLTS job openings slightly exceeded expectations in February, reaching 8.756 million
  • In China, the Caixin Manufacturing PMI edged up to 51.1 in March
  • Australian RBA minutes showed no rate hike consideration for the first time in two years.
  • AU: Westpac Consumer Confidence (Tuesday, 19 April at 10:30am AEDT)
  • AU: NAB Business Confidence (Tuesday, 9 April at 11:30am AEDT)
  • NZ: RBNZ interest rate decision (Wednesday, 10 April at 12:00pm AEDT)
  • CH: CPI and PPI (Thursday, 11 April at 11:30am AEDT)
  • CH: Balance of Trade (Friday, 12 April at 1:00pm AEDT)
  • US: CPI (Wednesday, 10 April at 10:30pm AEDT)
  • US: FOMC meeting minutes (Thursday, 11 April at 4:00am AEDT)
  • US: PPI (Thursday, 11 April at 10:30pm AEDT)
  • US: Michigan Consumer Sentiment (Saturday, 13 April at 12:00am AEDT)
  • EA: ECB interest rate decision (Thursday, 11 April at 10:15pm AEDT)
  • UK: GDP (Friday, 12 April at 4:00pm AEDT)
Source: Bloomberg
  • AU

Westpac Confidence Survey

Date: Tuesday, 9 April at 10.30am

Last month, the Westpac Consumer Sentiment Index fell 1.8% to 84.4 from a 20-month high of 86 in February. The decline reflected ongoing pessimism from households concerned with their finances and cost-of-living pressures.

The recently released minutes from the RBA’s March Board meeting showed that the RBA did not consider raising rates for the first time in nearly two years. The minutes' release coincided with the survey period for the Consumer Sentiment Index and should boost consumer confidence in April.

AU consumer confidence

Source – Eikon
  • US

CPI

Date: Wednesday, 10 April at 10.30pm

In February, headline inflation in the US rose by 0.4% month-to-month, bringing the annual rate of inflation to 3.2%, above the 3.1% expected. Core CPI also rose by 0.4% month-to-month, allowing the annual rate of core inflation to ease to 3.8% from 3.9% in January, but above market forecasts of 3.7%.

Although the headline and core inflation rates were higher than expected, within the details, there was a sharp normalisation in non-housing services inflation, and declines were observed in the super core measure, and the problematic owner’s equivalent rent category.

Further soothing nerves, Fed Chair Jerome Powell has reassured several times of late that despite hotter-than-expected inflation readings this year, inflation was on a “bumpy” road to 2% and that the central bank expects to lower rates at “some point” this year.

This month, the expectation is for headline CPI to rise by 0.4% Month over Month, which would see the annual rate climb to 3.5%. Core CPI is expected to rise by 0.3% Month over Month, which would see the annual rate cool to 3.7% from 3.8%.

US core inflation rate

Source: TradingEconomics
  • US

FOMC meeting minutes

Date: Thursday, 11 April at 4am

The minutes from the March FOMC meeting are set for release on Thursday, 11 April. In its January session, the Fed held the Fed Funds target rate steady at 5.25%-5.50% for the fifth straight meeting, aligning with expectations. The Fed's latest dot plots indicated the median end-2024 projection stayed at 4.625%, with three 25 basis point rate cuts anticipated this year.

The Fed revised higher its PCE inflation and growth projections for 2024. At the same time, its median unemployment rate was marked down to 4.0% in 2024 and maintained at 4.1% in 2025. The Fed Chair confirmed that an in-depth conversation had occurred about slowing the pace of balance sheet runoff, although a decision was not made on the size of the taper.

The minutes will be closely scrutinised for more details about the Fed's plans for its balance sheet, additional clues about when the Fed expects to start cutting rates, and its views on the run of hotter-than-expected US data.

US Fed Funds rate

Source: fred.stloius.org
  • CN

CPI and producer price index (PPI)

Date: Thursday 11 April 2024 12:30

China’s inflation data showed that consumer prices had reverted to positive territory in February with a 0.7% year-on-year growth, registering its first increase since September 2023. Its producer prices, however, remained subdued at a 2.7% year-on-year decline, which is a deeper contraction from the 2.5% decline in January.

With the turnaround in February consumer prices attributed to a spending boom during the Lunar New Year holidays from rising food prices to travel spend, all eyes will be on whether the surge in demand can be sustained or is just a one-off blip.

Upside surprises in China’s purchasing managers' index (PMI) data this week offered some green shoots for China’s economic conditions, but any return to deflation ahead may easily dampen such optimism. For March, China’s consumer prices may ease to 0.4% year-on-year with lower food prices.

China’s CPI and PPI% year-on-year

Source: Refinitiv
  • EU

European Central Bank (ECB) interest rate decision

Date: Thursday 11 April 2024 23:15

Next week, the ECB is expected to keep interest rates unchanged for the fourth straight meeting, with its deposit facility rate at 4.0%. That said, with Eurozone’s inflation unexpectedly easing last month, the case for the ECB to kickstart its rate-cutting cycle as early as the June meeting has been strengthened.

The minutes of the March meeting revealed that policymakers have been laying the groundwork for imminent policy easing, stating that “the case for considering rate cuts was strengthening” and that the date of a first rate cut is now “coming more clearly into view.” Money markets are currently pricing an 80% probability for a June 25 basis-point (bp) rate cut and pencilling in three to four cuts by the end of the year.

While policymakers are unlikely to give the all-clear for the inflation fight just yet, any dovish shift in tone from the March meeting or hints of discussions on rate cuts at the upcoming meeting will be on watch to further provide validation for a policy move in June.

ECB policy rates

Source: Refinitiv

This information has been prepared by IG, a trading name of IG Markets Ltd and IG Markets South Africa Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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