Analysts at Nomura noted the key events ahead for the week, with all times listed as GMT.
"US: Retail Sales (Wednesday 13:30), CPI (Thursday 13:30), Industrial production (Friday 14:15) 2. Europe: UK inflation (Tuesday 09:30), Industrial production (Wednesday 10:00) 3. China: CPI (Monday 02:30), 1Q GDP (Friday 03:00), Industrial production (Friday 03:00) 4. Central banks: BoC (Wednesday 15:00), BoE (Thursday 12:00)."
"For the U.S., next week will provide some key insights on consumer activity, inflation expectations, prices, and manufacturing. The key question going forward is whether the recent broad-based acceleration in core inflation in February is sustainable or not. Our economists continue to believe that the lagged effect of the stronger USD will offset to some extent the positive impact from the recent tightening in the labor market, and are looking for a 0.14% m-o-m (+2.3% y-o-y) gain in core CPI in March.
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More recently, given the broad depreciation in the trade-weighted exchange value of the USD during the month and renewed increases in prices of imported consumer goods, our economists’ view recognizes some upside risks to the inflation outlook that are worth watching. These movements should place upward pressure on import prices in March (consensus forecasts a 1.1% m-o-m increase).
Our economists expect favorable fundamentals (solid labor market performance, low energy prices, elevated savings rate) to enable consumers to continue to support growth. Given solid retail activity in March, they expect a 0.4% increase in core retail sales. Taking all inputs into consideration (including a slower pace of manufacturing production on the month and a decline in mining production) on industrial production, our economists forecast a relative stabilization of -0.1% in March, after a sizable -0.5% decline in February (see The Economy Next Week, 8 April 2016).
"In the UK, we expect a slight and temporary slowdown in the pace of headline inflation in March, largely associated with base effects from last year’s rise in fuel prices. On balance, our economists forecast CPI inflation of 0.2% y-o-y, with RPI inflation just rounding down to 1.2%.
We expect euro area industrial production to fall by 1.0% m-o-m in February, partly reversing the sharp rise in January. Despite the expected monthly fall, an outcome in line with these expectations would take average IP for Jan/Feb to around 0.7% above its Q4 average, suggesting a positive contribution from the industrial sector to euro-area Q1 GDP growth. On the central bank front, the next BoE meeting is scheduled ahead of the main forecast round for the May Inflation Report and the uncertain vote on the UK’s EU membership in June.
Because the MPC assumes the UK will remain in the EU, but conditions that forecast on a market curve that contains the dovish possibility of Brexit, the MPC should forecast above-target inflation. It will be difficult for the market to move to price in a rate hike in time for one to be delivered in November without a signal that the MPC sees the current curve as inconsistent with meeting the target if the UK remains in the EU."
"In Canada, we maintain our view that the BoC will remain on hold for the rest of the year, a view that was confirmed by the solid gains in employment (Solid gains in Canadian employment, 8 April 2016)."
"On China, PMIs and other high-frequency data suggest that growth momentum improved in March, resulting in stabilization in the non-financial sector in Q1. Our economists expect real GDP growth to slow to 6.6% y-o-y in Q1 from 6.8% in Q4 2015. Industrial production growth is expected to rebound to 6.2% y-o-y in March after falling to 5.4% in Jan-Feb. Higher domestic consumption and inflation should support retail sales growth (our economists expect CPI inflation rise in March on the back of sustained high food prices)."