Key Events: NFP Takes Centre Stage From Tariffs
- By Macro Hive
Key Events
G10
In the US, there is…
- NFP – Friday. Consensus predicts a marked slowdown from March (130k vs 228k in March) and no change in the unemployment rate. This seems unlikely. March’s 200k handle shows migrant workers are still contributing to labour supply, consistent with limited deportations so far. So, we are likely to get a positive NFP surprise. Alternatively, if consensus is correct about NFP, the slowdown would have to come from labour demand and would be accompanied by an increase in unemployment.
- Q1 GDP – Thursday. The most important part of the release will be services consumption, which is not impact by tariff frontrunning and will provide an unbiased indicator of trend consumption.
In the Eurozone and UK, the main events will be:
- Eurozone preliminary April inflation – Friday. Will be preceded by national releases from Tuesday onwards. Energy disinflation will probably keep the headline suppressed and provide room for continued ECB dovishness in the near-term.
- Eurozone unemployment – Friday. Follows earlier national releases. We expect continued labour market tightening on continued employment growth, and the possibility for Ukrainian refugee returnees.
Elsewhere in G10:
- New Zealand filled jobs – Monday. Deteriorating employment growth has bottomed while our indicator points towards a recovery.
- Australia Q1 CPI – Wednesday. Trimmed mean inflation is expected to increase +0.6% QoQ, which should allow the RBA to cut by 25bp in May.
- Switzerland UBS and KOF Indicators – Wednesday. The KOF indicator is expected to slip back to 101. However, this would leave GDP well-placed. Details in the UBS survey are likely to worsen.
- Australia Q1 retail sales – Friday. Retail sales are expected to bounce through March, thanks to stockpiling ahead of Cyclone Alfred and a solid rise in basic food retailing.
- Canada monthly GDP – Wednesday. The Canadian economy has held up recently with weakness limited to the hiring rate. It is likely monthly GDP remains robust as the economy continues benefitting from a frontloading of imports.
EM
- China PMI – Wednesday. High frequency capacity utilization, container throughput, and domestic commodity prices indicate a significant drop in the PMI’s major components (production, export order, and prices).
- Taiwan GDP – Wednesday. Exports have held up suggesting some frontloading ahead of US tariffs. This will be offset by softer domestic demand with QoQ growth expected to slow from the bumper Q4. With a favourable base effect, the YoY rate is set to rise from last quarter’s 2.9%.
- Hungary GDP – Wednesday. Hungary’s economy likely started the year on a sluggishly, with weak monthly activity data (exacerbated by accelerating inflation and a weak currency) and exports growth broadly flat. The government’s downwardly revised 2.5% GDP growth forecast for this year still looks optimistic.
- Czechia GDP – Wednesday. Consumer spending is expected to remain the main growth driver through Q1, with strong real wage growth and strong net new lending. Industry will remain weak.
- Poland inflation – Wednesday. April inflation will face offsetting dynamics from another decline in fuel prices versus the sharp PLN depreciation. With favourable base effects, the YoY rate will drop back from Q1’s 4.9%, and alongside slowing wage growth, will revive the debate about near-term rate cuts.
- South Korea inflation – Friday. CPI is expected to remain near target with lower energy prices and weak economic activity. A more stable currency also helps and should allow the BOK to continue with rate cuts at the next policy meeting in late May.
Central Banks in Action
- BoJ to stay on hold – Thursday. The trade war has upended the BoJ’s plans to hike again this year. Expect Ueda to emphasize the resilience of the domestic economy but buy time to assess the full impact on wage growth and domestic investment.
- Hungary rate meeting – Tuesday. Despite downside risks to growth from Trump tariffs and subdued demand for EVs, still-elevated inflation and EURHUF remaining above 400 rules out any near-term dovish shift from the NBH.
- Thailand rate meeting – Wednesday. The recent earthquake alongside already soft domestic demand and limited fiscal space indicates another rate cut this week. Inflation sub 1% and a relatively stable currency also suggest scope for another BOT cut.
- The Fed’s pre-meeting black out period starts this weekend.
Markets to Watch
- USD faces the scrutiny of domestic data with JOLTS, PCE, ISM and NFP due next week. We remain short.
- AUD/NZD remains in focus with a selection of Australian data out this week. We have extended our short AUD/NZD target to 1.04, from 1.06.
- UK rates – the market has pared back pricing for BoE cuts. We are watching for opportunities to go long SFIZ5 and to go outright long UK gilts.
Political Events to Watch
- Canada federal election – Monday. The incumbent Liberal party, under new leader Mark Carney, is expected to win with (according to the latest polls/seat projections) a strong probability of a majority government.
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