Key Events: Central Bank Bonanza, With Key Decisions Across DM and EM

Key Events

G10

In the US, there is only one key data point:

1. Retail Sales – Monday. Risks to the consensus 0.3% for the control group are skewed to the downside as high-frequency data, retailers, consumer lenders, and anecdotal evidence point to a slowdown.

In the Eurozone and UK, the main events will be:

1. Eurozone Final February CPI – Wednesday. German HICP was revised down 0.2ppt YoY vs preliminary, so a -0.1ppt revision in the aggregate is possible. More important is whether wage-intensive services inflation momentum was strong.
2. UK Labour Market Data – Thursday. UK labour market data is highly volatile, but we will be watching for signs of employment declining.
3. UK February Public Sector Finances – Thursday. January’s deficit was far higher than OBR expected on an undershoot in income tax revenues. We will be watching to see if there is any offset in February.
4. 2^nd and 3^rd Bundestag Readings of Proposed Constitution Changes – Tuesday. There will be a debate and vote on the bill in the 2^nd reading, as well as proposed amendments to be voted on. The 3^rd reading will see the final vote.
5. Bundesrat Vote – Friday. Expected to come on Friday assuming bill passes in Bundestag.

Elsewhere in G10:

1. New Zealand Q4 GDP – Wednesday. The Kiwi economy is expected to have grown +0.4% through the fourth quarter. We see a risk of an upside surprise.
2. Australia Labour Force Survey – Thursday. Unemployment could drop to 4% (consensus: 4.1%) as those waiting to start a job (a new January seasonality) begin their employment.
3. Canada Inflation – Tuesday. The BoC has largely looked through sticky inflation data recently. Further sticky data will pressure their ability to cut in the face of tariff threats.
4. Japan Inflation – Thursday. Last month’s CPI was a cooler than expected due to the reinstated energy subsidies. This month the focus will shift back onto food and imported goods. Has a stronger JPY helped reduce cost push inflation?

EM

1. China, Jan-Feb Economic Data – Monday. We expect a weaker start of IP in the new year (market expectation at 5.3%), given declining exports and slow recovery of industry capacity utilization. Retail sales could also disappoint to the downside (market expectation at 3.8%), car sales growth rate has dropped compared with Q4 last year. However, the infrastructure investment could surprise the market on the top side (market expectation at 3.2%), given the jump of cement production.
2. South Africa Inflation Expectations – Monday. Expectations should continue to decline in line with the sharp disinflation through H2.
3. South Africa CPI – Wednesday. Price gains for medical aids will matter this month given the February survey. And combined with rising transport prices, YoY inflation is set to rise despite a favourable base.
4. Poland Real Economy Update – Thursday. Last month’s strong data, particularly on construction, raised expectations for an investment-led recovery this year. Another upside surprise would cement the strong growth narrative.

Central Banks in Action

1. Fed – Wednesday. The Fed has signalled it would remain on hold, and we expect no change to the SEP because of the uncertainty on the net impact of the government policies.
2. BoE – Thursday. Expect the BoE to leave bank rate unchanged at 4.5%, in line with their ‘gradual’ (quarterly) cutting cycle, with little change in tone. Expect Dhingra and Taylor (doves) and Mann (hawk, but who voted for 50bp at last meeting) to vote for a cut. We see the BoE cutting more than market pricing this year, with an acceleration likely to come at latest in August.
3. BoJ to stay on hold – Wednesday. Since the last meeting, Shunto wage hikes have been confirmed, JPY is stronger, but so is food inflation. The BoJ will reiterate their need for more data in the face of weak consumption and tariff threats.
4. BI – Wednesday. Currency weakness and rising core inflation suggests January’s surprise rate cut will not be repeated.
5. PBoC LPR Rate Decision – Thursday. The PBoC will keep the Loan Prime Rates on behalf of the commercial banks unchanged, given that the PBoC is still tightening liquidity and have not indicated a quick cut of the 7-day OMO rate.
6. CBC – Thursday. Equity-driven TWD weakness alongside expectations for inflation to rise point to rates on hold.
7. SNB – Thursday. We expect the SNB cuts the policy rate by 25bps, to 0.25%, given still-weak core inflation pressures.
8. Riksbank – Thursday. We expect the Riksbank leave rates unchanged. However, given upside inflation surprise, we expect a hawkish tone.
9. SARB – Thursday. Low but rising inflation, recent rand weakness, heightened fiscal and political risks and ongoing tariff uncertainty will mean a very cautious SARB with rates set to remain firmly on hold.

Markets to Watch

• USD remains under pressure. However, an unchanged message from the Fed could provide support. We remain short.
• GBP/JPY will have to deal with the BoE and BoJ. We think BoJ hawkishness has reached a limit, for now, and are positioned for JPY to weaken ahead.
• AUD/NZD will be pulled in both directions with data likely to be stronger than expected on either side of the ditch. We remain short.
• NOK/SEK could head lower over the next week if hawkish Riksbank risks prevail. We anticipate that this could enter us into the second half of our long NOK/SEK trade.

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