Wednesday’s highlight will be the monetary policy announcements from both the BoJ and the FOMC and Thursday Australia will release employment change and unemployment rate data.
Switzerland will also see the SNB's monetary policy announcement, while the U.S. will release unemployment claims data.
In the U.S., the consensus for core retail sales m/m is 0.3%, compared to the previous -0.4%, while retail sales m/m is expected to rise to 0.6% vs the prior -0.9%.
For this week's data, a rebound is expected, signaling that despite rising household debt, consumers’ overall financial health remains stable. Strong personal income growth continues to support moderate consumption growth, a trend likely to persist in the near term.
Headline inflation (y/y) in Canada is expected to rise from 1.9% to 2.2%, marking the first time when it exceeds the BoC's 2.0% target in over half a year. Both median and trimmed measures have shown signs of picking up, indicating that inflationary pressures are increasing.
In terms of monetary policy, the BoC is expected to continue cutting rates throughout the year while closely monitoring the impact of tariffs on inflation and the broader economy. Governor Macklem emphasized the need for a cautious approach, to balance cost pressures from tariffs with weaker demand.
The Bank has been cautious about tightening, mainly due to uncertainty regarding economic recovery, potential concerns over global trade policy amid tariffs, and, not least, market volatility.
At this week's FOMC meeting, it is widely anticipated that the Fed will keep rates unchanged. Fed Chair Powell is likely to signal a wait-and-see approach, as the U.S. economy is showing signs of cooling down.
At this meeting, the focus will be on the Summary of Economic Projections (SEP). Expectations are that the median forecast will continue to reflect 50 bps in rate cuts by the end of the year, though there is a risk of 75 bps of easing.
In Australia, employment is expected to increase by 31.4K in February, down from 44.0K in the previous month, while the unemployment rate is projected to remain steady at 4.1%.
Analysts from Westpac expect the labor market to remain strong, though job creation is likely to moderate slightly compared to January’s robust growth. Seasonal factors played a role in recent employment fluctuations, as an unusually high number of individuals were classified as “unemployed” despite having jobs secured for February. This contributed to the unemployment rate rising from 4.0% to 4.1% in January.
In the U.K., wage growth is expected to remain around 6%, continuing to challenge the BoE as labor market pressures prove more persistent than anticipated. Despite signs of a gradual slowdown in hiring, wage growth has not moderated as quickly as expected.
The latest consensus forecasts project a claimant count change of 7.9K, down from the previous 22.0K. The average earnings index 3m/y is expected at 5.8%, compared to the prior 6.0%, while the unemployment rate is forecast to remain unchanged at 4.4%.
For Switzerland, analysts are divided on the likelihood of a 25 bps rate cut by the SNB, though market expectations are 75% skewed towards a reduction.
In Canada, the consensus for core retail sales m/m is 0.0%, down from the previous 2.7%, while retail sales m/m are expected to decline by -0.4% vs. the prior 2.5%. According to RBC analysts, the anticipated drop was primarily driven by a sharp 9% decline in unit auto sales. However, this weakness was partially offset by higher gas station sales, reflecting increased fuel prices.
This article was written by Gina Constantin at www.forexlive.com. Read More Details
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