The week kicks off on Monday with the U.S. reporting on core retail sales m/m, retail sales m/m, and the Empire State Manufacturing Index.
On Tuesday, attention shifts to the U.K.'s labor market data, followed by Canada's release of inflation figures. Additionally, the U.S. will provide data on building permits and housing starts.
Bank of England Governor Bailey is scheduled to speak at the International Monetary Fund Spring Meetings in Washington DC, while Bank of Canada Governor Tiff Macklem will participate in a fireside chat on economic trends in North America at the Wilson Center's Washington Forum.
Wednesday brings inflation data releases for New Zealand and the U.K. Thursday sees Australia reporting on employment change and the unemployment rate, while the U.S. releases data on unemployment claims and existing home sales.
On Friday, Japan will announce the National Core CPI y/y, and the U.K. will release retail sales. Throughout the week we also expect remarks from several FOMC members.
The consensus for U.S. retail sales m/m is 0.4% from prior 0.6% and for core retail sales m/m is 0.5% from 0.3%. Retail sales are on a positive trend fueled by robust wage growth. Analysts at Wells Fargo indicate that real-time credit card data suggest consumer spending has remained elevated above pre-pandemic levels in March.
In Canada, all attention will be focused on the inflation data to assess whether it's on path to the BoC's desired 2% target, which will determine the trajectory of the Bank's monetary policy. While recent inflation figures in Canada have decreased, indicating the effectiveness of existing policy measures, the decline may occur at a slower pace in March with risks tilted to the upside.
Wells Fargo anticipates headline inflation to increase to 3.0% from 2.8% y/y, with average core inflation expected to decrease from 3.2% to 3.1%. The analysts believe the BoC is still on course to deliver a 25bps rate cut at the June meeting.
In New Zealand the inflation remains too elevated compared to the RBNZ's target of 2.0%. Westpac's projections for Q4 2023 inflation is +0.8% from +0.5% prior, while annual inflation is set to drop from 4.7% to 4.2%. In its last projections in February, the RBNZ anticipated a smaller 0.4% rise for Q4, but was missing data for two months and noted upside risks. It remains to be seen if the Bank will be concerned by the higher than projected increase in quarterly inflation and the specific components that drove it.
The market will closely monitor the CPI data from the U.K. which will be a key factor in the BoE's decision on when to start cutting interest rates, along with labor market data which also holds significant importance.
Recently, inflation data in the U.K. dropped more than expected, with the headline CPI registering at 3.4% y/y and the core CPI standing at 4.5%. This decline can be attributed to reduced price pressures across various components including food, clothing, footwear, housing and recreational products.
For this week's data, the consensus is for the headline inflation to drop to 3.1%, core inflation to also decline to 4.1% and services inflation to slow to 5.7%. If the data reflects such moderation in inflation and labor market data also softens, the BoE will be likely to deliver its first rate cut at the June meeting.
In Australia the consensus for the employment change is a drop from 116.5K to 7.2K and for the unemployment rate to rise from 3.7% to 3.9%. Last month the employment change data surprised with a 116.5K rise, but was mainly driven by shifting seasonal patterns for the first part of the year. This week's data is expected to reflect a clearer picture about the labor market conditions as seasonal dynamics fade away.
In Japan the consensus for the National core CPI y/y is to drop from 2.8% to 2.7% and the core inflation (excluding fresh food) to drop to 2.6% from 2.8%. The latest yen depreciation and the rise in commodity prices likely put pressure on the headline inflation.
