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A quieter data-centric week could instead be lying ahead of us. Most markets would be closed on Friday for Good Friday holiday.
We had the March Federal Open Market Committee (FOMC) meeting minutes highlighting the Fed’s intention to see its balance sheet shrink, which erased the of gains from strong private payroll data. The end of the week further saw a pickup in risk-off sentiment with geopolitical concern arising from an unexpected US airstrike of Syria.
That said, ahead of March’s US NFP release and the second day of the Trump-Xi summit, market movements remain at best muted. USD/JPY clocked approximately -0.70% change as of Friday afternoon while the biggest mover amongst the majors, the AUD, shed 1.30% against the USD. The AUD/USD pair had seen changes driven primarily by the dovish stance held by the Reserve Bank of Australia after their central bank meeting on Tuesday.
US data needs to pull its weight
The debate around risk sentiment had been brewing this week and we have seen telling signs of risk-off sentiment on Friday. Besides a breach of US 10-year treasury yields below the 2.30% level, gold had shot up to trade above $1260. With the US being the epicentre of drivers at the moment, the upcoming week could see several items on the watch list for traders around the world.
Besides an appearance by Minneapolis Fed President Neal Kashkari, the market could find eyes on US March US consumer prices amid the concern on inflation movements. A slight decline in year-on-year (YoY) consumer inflation had been penned in by the market. On the performance of the economy, the market does not appear to have strong expectations of consumer demand with March retail sales expected to see only modest improvement.
The main attention could instead be on the wave of Q1 earnings report for the stock market. Specifically, Citigroup Inc. and JP Morgan Chase & Co. are expected to kick-off bank earnings on Thursday and lead expectations for the financial sector. A broadly rosy outlook appears to be the case for the sector that could prompt interests from investors.
The world’s largest economies always appear to have a stronger sway for markets and this is no different for Asia. The fascination with China’s performance is expected to continue into the upcoming week, particularly with the release of March’s producer and consumer prices, and also March’s trade figures. Contrasting trends have been expected for March’s consumer and producer prices and the latter could be of key interest amid concerns of China’s tightening. Any deviation on the upside from the deceleration in PPI expected could certainly heighten this concern.
Meanwhile China’s March trade balance will be due on Thursday and exports is expected to revert into YoY growth in USD terms. For Asian markets this could be a potential driver into the end of the week. Specifically for Singapore, advanced estimate of Q1 GDP will be released on Thursday and is expected at 2.6% YoY according to Bloomberg consensus. This figure sits above the full-year estimate of 2.0% YoY by private forecasters. Surprises on the upside will be watched and could certainly help the local STI challenge upside resistances ahead of the 3200 figure.
Other key data due in the week includes Japan’s March machine tool orders, March PPI and February industrial production (final). Bank of Korea is also expected to announce their monetary policy on Thursday with no change in rates expected.