• The week ahead - Slugging it out
  
• Informa Global Markets calendar for the week ahead

The week ahead

Slugging it out

After a hiatus, data packs a huge punch and could spell a volatile week for High yielders and the Dollar. A linking theme centres on key inflation outturns in the UK, Canada and New Zealand that could set the tone for these high flying currencies. But the US provides a centre point, not only with inflation releases but a key set of real economy data. When set against the current undertones of uncertainty over Fed policy, the combination will be an acid test as to whether the broad Dollar basket can hold around current levels.

Some angst on the housing side has eased with the February slate, but Monday??™s April NAB housing market index and Tuesday??™s March starts and permits will be a test whether this stabilisation continues, although the completions versus starts combo suggests further falls in construction are in train. March industrial production features the same day with retail sales ahead of this on Monday. Sales have been around flat and in a falling in y/y terms - the underlying trend risks further weakness in this value based number. February production recovered after January??™s weather affected dip. But sentiment surveys have generally been weaker, suggesting that this bounce could be reversed. The first of the April surveys emerge with the Empire State Monday and Philly Fed Thursday - both were soft, especially the Empire State, last month. However, while real side data may be Dollar negative, CPI (Tuesday) shows little signs of getting back to the Fed's comfort zone so that overall the US mix leaves the Fed outlook still highly uncertain. On the external front, the counterpart of the February US trade deficit ??“ the US Treasury TICS portfolio data ??“ is released Monday. Having rebounded sharply in January for the paltry December read, anecdotal evidence suggest a strong February outturn. The Fed??™s weekly custody data showed strong official purchases during the month (a stonking Usd 54.4 bn), although lighter corporate issuance could weigh ??“ European accounts are especially major purchasers of US corporate debt. Nonetheless, unless there is a sharp downside surprise, the dollar is unlikely to show much reaction.

Staying in the Americas, Canadian March inflation (Thursday) will provide a pivot point, particularly given the sharp jump in the February core read that triggered the rally in the Loonie as the data dashed any near term hopes of a BoC easing. While some special weather related factors and a major fire affecting gasoline prices were involved and the print could settle back, the headline has remained at 2% since July last year.

Like the US, real side data is also thrown into the mix for the Loonie. The BoC business outlook plus the February manufacturing slate emerge Monday and Tuesday. The drop in January against upward revisions to December were largely down to one-off factors which should unwind in February ??“ two sectors (Transportation and energy) were responsible for the bulk of the decline. Of the remainder of the data slate, February retail sales Friday brings up the rear. The January outturn was stronger than the headline suggested with the weakness concentrated in the automotive sector. The February outturn should move back to reflect the underlying tone. February wholesale trade is out Thursday. Again, a narrow range account for January??™s fall.

Turning to the Antipodeans, New Zealand Q1 CPI is pivotal, given the hype over the RBNZ pulling the interest rate trigger yet again while Bollards number one concern; "the housing market", will be featuring again. March updates from QV and REINZ are due throughout the week. Judging by reports, the housing market is expected to have remained strong despite RBNZ??™s rate March hike. House sales likely to remain elevated and prices kept around record highs. March CPI falls into the spotlight on Tuesday with inflation expected to have nudged back up over Q1 due to a rise in fuel prices. Whilst this still well within RBNZ??™s 1-3% target band, it is likely to be higher than RBNZ??™s March MPS forecast of 2.3%. Moreover, the more watched non tradable inflation could rise by a solid pace keeping the annual pace elevated. Net migration, a key pillar of the housing market strength, will otherwise be eyed closely on Friday.

In Australia, surveys dominate with NABS Q1 business onfidence due Monday, followed by consumer confidence on Wednesday and consumer inflation expectations on Thursday. Focus will be on consumer confidence, which could receive a hit in April from pumped up expectations of a RBA rate hike; whilst higher fuel prices could nudge up inflation expectations. Last but not least will be Q1 trade price index on Friday. Import prices are likely to have bounced back firmly. Moving to the UK, data moves into overdrive with the key slate of prices, jobs and sales, starting with March input prices Monday through to retail sales on Friday. Into all this is thrown the minutes of the April BoE meeting. Given the decision to leave rates unchanged at 5.25%, the balance between hawks and doves on the Committee will be instrumental is setting the tone.

At the same time, the data slate could set pulses running. After the unexpected jump in February CPI, the March read Tuesday assumes critical importance and whether it moves further towards the 3% BoE upper limit hit in December. The turn around in oil prices in particular does not provide a comfortable background, and this should be reflected in the March input prices Monday. Input prices jumped sharply in February, while the output component shows pressure moving to the factory gate level. February retail sales also recovered from January??™s dip, and the March outturn could continue to reflect the robust tone - the CBI April distributive trades survey precedes this on Monday. As for jobs, the claimant count has been falling for the past few months while, more important for policy purposes, the headline 3MMA average earnings growth rate rose to 4.2% in January. Any further upmove towards the BoE??™s 4.5% threshold would leave alarm bells ringing. April Hometrack and Rightmove surveys are also out Monday.

In the Eurozone the first April sentiment read arrives with the German ZEW Tuesday. Investor sentiment passed into positive territory in February, and extended in March. Indeed, this survey of financial market participants remained relatively unperturbed by market volatility during that month. This has since calmed and further gains are likely in April, although the surge in oil prices continue to pose a risk. Overall, the outturn supports the German upswing. Note also March French household consumption Friday. The last read broke the strong trend, but the dip should reverse. The first round of the French Presidential election is on the following Sunday.

Japanese data is on a backburner with mostly revisions on tap. However, the Thursday weekly portfolio data will be of interest as markets attempt to judge the extent of likely purchases of foreign bonds by Japanese funds. Domestically, February??™s tertiary index will be eyed to provide clues on the health of the service sector recovery. Friday otherwise sees the all industry index. February Tokyo department store sales, dept store sales and supermarket sales also slated.