RBA meeting, NFP data as well as employment data from the New Zealand and Canada and inflation data from Switzerland will highlight the week ahead of us.
USD
Department of Justice dropped a criminal investigation into the Fed Chairman Powell. Senator Thom Tillis, who blocked the confirmation of Warsh as a new Chairman until investigation into Powell is ongoing, said on Sunday that he would now support nomination of Warsh. This makes it almost certain that Kevin Warsh will be the next Chairman of Federal Reserve.
Huge news was delivered on Tuesday as UAE announced it will be leaving OPEC on May 1. Before the US- Iran war, the UAE was producing 3.4mbd of crude oil which is around 12% of total OPEC output and makes it the fourth-largest producer within the group after Saudi Arabia, Iran and Iraq. The UAE plan to increase oil production up to 5mbd by 2027 and were frustrated by the production cuts imposed by cartel. This move will curtail OPEC’s capability to manage oil prices through production quotas.
Wall Street Journal article reported that Trump instructed officials to prepare for an extended blockade of the Strait of Hormuz which led to WTI surging to $112. All four Big Tech names, Amazon, Alphabet, Meta and Microsoft, had beaten on earnings with Alphabet particularly smashing revenue expectations. They have increased plans for spending on AI CAPEX.
Fed has left the Fed funds rate unchanged from 3.50% to 3.75% as was widely expected. The statement shows economy expanding at a solid pace, low job gains and elevated inflation due to increase in energy prices. Developments in the Middle East complicate the picture for economic outlook as they bring high level of uncertainty. Governor Miran dissented as he voted for a 25bp rate cut. while “Beth M. Hammack, Neel Kashkari, and Lorie K. Logan, who supported maintaining the target range for the federal funds rate but did not support inclusion of an easing bias in the statement at this time.” These three members are not agreeing that, as the tone of the statement suggests, next move in rates will be down giving the meeting hawkish tone.
During the press conference Powell congratulated Warsh on nominee from banking committee. He stated that he intends to continue as Governor after his term as Chairman ends and will keep low profile. The duration of his governorship is yet to be determined. This was Powell’s last press conference as a Chairman. Powell’s decision to stay on as Governor can be interpreted as hawkish as it means he is blocking another Trump appointee to the FOMC committee who would be much more dovish.
Advanced Q1 GDP reading came in at 2% annualised vs 2.3% as expected. AI CAPEX led the growth with gross private domestic investment contributing 1.48pp to the reading followed by personal consumption with 1.08pp and government consumption with a 0.73pp. Net exports were a drag on reading with -1.30pp. Headline March PCE jumped to 3.5% y/y as expected from 2.8% y/y in February. Core rose by 3.2% y/y as expected, jumping from 3% y/y the previous month.
The yield on a 10y Treasury started the week at 4.31%, rose to 4.44% and finished the week at around 4.39%. The yield on 2y Treasury started the week at 3.79%, rose to 3.97% and finished the week at around 3.88%. Spread between 2y and 10y Treasuries started the week at 52bp and finished the week at 51bp. FedWatchTool sees the probability of a 25bp rate hike at June meeting at around 5% while probability of no change is at around 95%. WTI had another volatile week rising to $112 and then coming down to $103 after talk about Iran sending their peace proposal. S&P and NASDAQ reached new all-time-highs.
This week we will have ISM Services PMI as well as NFP data on Friday. Headline number is expected at around 95k with the unemployment rate staying at 4.3%.
Important news for USD:
Tuesday:
ISM Services PMI
Friday:
NFP
Unemployment Rate
EUR
ECB’s bank lending and consumer expectations survey showed increasing stagflationary pressures. The former survey shows tightening of credit standards and weaker demand for credit while latter shows inflation expectations moving up. Economic sentiment dropped to lowest level since October of 2022 with surging inflation expectations and consumer conference plunging to levels not seen since January of 2023.
ECB has left key interest rates unchanged, deposit rate at 2% as was widely expected. Energy shock caused by the US – Iran war and its impact on inflation was put front and center as the biggest concern for policymakers. As a result, short-term inflation expectations rise while long-term inflation expectation remain well anchored. Both upside risks to inflation as well as downside risks to growth intensify. Policymakers see policy as well positioned despite the energy supply shocks and will stay data-dependent and make decision on a meeting-by-meeting approach.
ECB President Lagarde stated that although the decision to keep rates steady was unanimous there was a debate about raising interest rates. She did not give firm guidance on future rate hikes but she has left several more hints that make us expect a 25bp rate hike in June. Analysts agree that energy supply shocks caused by US – Iran war will force their hand and markets are almost fully pricing it in. ECB policymaker Nagel echoed the market sentiment by saying that if economic outlook does not improve it would be appropriate to act in June.
Preliminary April inflation for the Eurozone rose to 3% y/y from 2.9% y/y in March while markets were bracing for a 2.9% y/y print. Energy price surge caused by US – Iran war pushed prices to the level not seen since September of 2023. Core CPI ticked down as expected to 2.2% y/y from 2.3% y/y the previous month. German inflation print came in at 2.9% y/y, lower than 3% y/y as expected but another increase from 2.7% y/y in March. Core print came down to 2.3% y/y from 2.5% y/y the previous month showing that price pressures are still contained within energy prices and have not passed through to other sectors. French reading rose to 2.2% y/y from 1.7% y/y the previous month with another 1% m/m increase in prices. Spanish reading came in at 3.2% y/y vs 3.4% y/y as expected. Energy prices are pushing prices higher and although the reading is softer than expected it is still very elevated above 3%. Italy printed 2.8% y/y vs 2.6% y/y in March.
Preliminary Q1 GDP for the Eurozone came in at 0.1% q/q vs 0.2% q/q as expected and in Q4 of 2025 and 0.8% y/y vs 0.9% y/y as expected and down from 1.2% y/y in the previous quarter. Germany, Spain and Italy beat expectations with 0.3% q/q, 0.6% q/q and 0.2% q/q prints respectively, while France missed expectations and delivered no growth in first quarter.
GBP
BoE has left bank rate unchanged at 3.75% with a 8-1 vote (Chief Economist Pill voted for a rate hike as was widely expected). Members agreed that it is reasonable to leave the rate unchanged given the mounting uncertainties due to Middle East conflict. They now see that inflation will likely exceed their projections for the year due to higher energy prices and warned that there is an increase in risk of second-round effects from inflation. The statement shows “Monetary policy cannot influence energy prices but will be set to ensure that the economic adjustment to them occurs in a way that achieves the 2% inflation target sustainably.“
BoE Governor Bailey reiterated from the statement that monetary policy cannot stop effects of energy prices increases on inflation. He added that their next move will depend on the size and duration of energy price shock. Bailey stated that second-round effects build more slowly than direct events and warned that bank cannot wait for conclusive evidence of these effects before acting which makes their job even harder at the moment. He did not push back against market pricing suggesting that he thinks that markets are correct in pricing hikes.
AUD
Q1 headline inflation came in as expected at 1.4% q/q and 4.1% y/y surging from 0.6% q/q and 3.4% y/y print in Q4 of 2025. Trimmed mean, core measure, ticked down to 0.8% q/q from 0.9% q/q in the previous quarter with 3.5% y/y ticking up from 3.4% y/y in Q4. RBA wants trimmed mean inflation measure to be in 2-3% range and with it moving further away from that range they will be forced to hike rates again next week.
Official PMI data for the month of April saw manufacturing come in at 50.3, beating expectations of 50.1 but ticking down from 50.4 in March. Non-manufacturing dropped into contraction with a 49.4 print after a 50.1 reading the past month. Composite managed to stay in expansion with a 50.1 print. RatingDog PMI, private survey of SME, jumped to 52.2 from 50.8 smashing expectations of a 51 reading.
This week we will have RBA meeting. Additional 25bp rate hike is expected as inflation stays above the range.
Important news for AUD:
Tuesday:
RBA Interest Rate Decision
NZD
While Aussie inflation was moving out of their targeted range RBNZ Governor Brenan stated that New Zealand’s core inflation in the first quarter is stable within targeted 1-3% range. NZD was gaining strength in recent weeks on the back of more aggressive rate hikes pricing but this will dampen that market enthusiasm. RBNZ will have its MPC members’ votes will be public now in an attempt to increase transparency.
Business confidence plunged in April to -10.6 from 32.5 in March. Profit expectations and ease of credit led the crush. Employment intentions plunged, turning negative for the first time in two years. Cost expectations and inflation expectations surged higher while wage expectations decreased. One small positive is easing in pricing intentions as well as slower wage growth which indicates that there will be no pressure on prices from the demand side, it will be driven solely by supply side, energy shocks. Consumer confidence has crashed to lowest level in almost new three years.
This week we will have Q1 employment data.
Important news for NZD:
Wednesday:
Employment Change
Unemployment Rate
CAD
BoC has left interest rate at 2.25% as was widely expected signaling a wait-and-see stance amid high uncertainty, as the economy shows modest growth, around 1.2% expected in 2026, with excess supply gradually being absorbed, while inflation—after being near target—has risen to around 2.4% and is expected to peak near 3% due to higher energy prices; the labor market remains soft, and trade uncertainty and geopolitical risks (especially oil shocks and tariffs) are key headwinds, leaving policy broadly appropriate for now but with a two-sided reaction function: potential rate cuts if growth weakens (e.g. from trade shocks) or hikes if energy-driven inflation becomes persistent, with any future adjustments likely to be gradual and data-dependent. Canada will set up a sovereign wealth fund to the tune of $25bn with primary function of financing major projects
This week we will have Q1 employment data.
Important news for CAD:
Friday:
Employment Change
Unemployment Rate
JPY
BoJ has left its short-term rate unchanged at 0.75% as was widely expected but the vote was a surprising 6-3. Nakagawa, Takata and Tamura dissented as they voted for a rate hike. Three dissenters argued that bank’s price stability target has been achieved and that keeping financial conditions accommodative for longer could would add to upward price pressures. Inflation forecasts saw a bog upward revision for 2026 to 2.8% from 1.9% seen in January. Inflation in 2027 is now seen at 2.3% vs 2% seen in January while for 2028 it is seen remaining at 2%. The main driver of higher inflation are energy prices which have been surging higher since the beginning of US – Iran war. Higher energy prices will also impact growth so the members downgraded growth prospects for 2026 to 0.5% from 1% in January but they see that government subsidies and other actions will help growth recover in 2027 and print 0.7% vs 0.8% as projected in January. GDP for 2028 is unchanged at 0.8%. The vote split and higher inflation projections give this meeting a hawkish bias and JPY gained ground on it.
BoJ Governor Ueda stated at the press conference that overall economic outlook remains stable despite disruptions by the conflict in the Middle East but warned that they must be on alert for any additional undesired consequences on growth due to supply shocks. He warned that rising oil prices could have greater impact on inflation and asked for more time when assessing the impact of US – Iran ward on the economy. Ueda added that BoJ will stay on rate hiking path while adjusting levels of monetary support but that timing of next move up is hard to pinpoint at the current moment. He stated that their base case is for oil prices to return to $70. Ueda’s comments downplayed the hawkishness of the statement as there was no urgency in his speech, just more of wait-and-see approach. Still, markets see almost 70% probability of a rate hike in June.
BoJ has tested the markets during the week with heightened rhetoric on Thursday and then they intervened in the market to the tune of around $35bn with USDJPY and EURJPY plunging over 400 pips and GBPJPY crashing over 500 pips. They have intervened again on Friday. Next week is Golden Week holiday, so markets will be closed from Monday to Wednesday which will leave low liquidity conditions in the market and MoF warned again that it is ready to intervene during that period.
April Tokyo inflation showed benign readings as headline number ticked up to 1.% y/y from 1.4% y/y but lower than 1.7% y/y as expected. Core reading, ex energy, also printed 1.5% y/y, but it came down from 1.7% y/y the previous month and also lower than 1.8% y/y as expected. It was the lowest print since March of 2022. Finally, ex fresh food, energy component, so-called core-core, dropped below 2% for the first time in over twelve months printing 1.9% y/y from 2.3% y/y in March and it was expected for it to stay at that level. These readings are negative for JPY as they do not pressure BoJ into hiking so it will be interesting to watch the developments as markets push for weaker JPY and MoF intervenes to strengthen it.
Final manufacturing PMI for the month of April was revised up to 55.1 from 54.9 as preliminary reported marking the highest reading since January of 2022. Growth in new orders was the main driver but anecdotal evidence suggests that this growth is more a form of frontloading as customers fear higher prices in the future caused by supply shocks. Employment index also grew at a healthy pace while one concerning moment is that input prices reached highest levels since October of 2022 as prices for raw materials and energy skyrocketed.
CHF
SNB total sight deposits for the week ending April 24 came in at CHF455.9bn vs CHF453.6bn the previous week. Just a small uptick as deposits keep meandering within the range and SNB lets market guide Swissy strength.
This week we will have inflation data.
Important news for CHF:
Tuesday:
CPI
