• Wage growth data once again crucial in NFP report
  • Better Canadian labour market data may encourage BoC to lift rates
  • Inflation figures from France and Italy to be released in the morning

As almost all stock markets around the globe will remain shut today liquidity on Friday is expected to be super low. Today’s macroeconomic calendar does not provide us with any top-tier release thus the only readings that may find some attention among investors are inflation readings from France and Italy. The French figures surprised to the upside as the CPI measure in YoY terms came in at 1.5% against consensus of 1.4% and 1% MoM against 0.8% seen previously. Along with higher inflation readings in Spain and Germany this print may cause ECB members to be more hawkish. The Italian CPI figures will be published at 10:00 am BST and are also expected to show an upside against latest value.

What to watch beyond this week?

Shaky equity markets have started to weigh on rate hike expectations in the US, sending bond prices higher. However, financial markets is one thing and the domestic economy is another thing. The Fed will pay attention to the labour market and wage pressures and act accordingly so the NFP report is anticipated. A similar report will be released in Canada this week while commodity traders should watch the weekly DOE report on inventories.

The NFP report in the US (Friday, 1:30pm GMT)

The NFP report remains crucial for investors as the pace of monetary tightening is still uncertain. Let us recall that such report caused shockwaves 2 months ago when it showed acceleration in wage growth. Last month we warned that a high base effect could slow this growth and it was the case. This time base effect is low so wage growth could accelerate again, perhaps to at least 2.8% y/y. A number above 3% could quickly reinvigorate discussions about 4 rate hikes this year. Affected markets: EURUSD, US30. 

Labour market report in Canada  (Friday, 1:30pm GMT)

The Canadian dollar was among the losers in the first quarter of 2018 but its prospects could brighten going forward. First of all, despite all the Trade Wars talk it looks like the US will maintain special treatment of its key trading partner. Second, inflation data improved a lot so the Bank of Canada could quickly start considering interest rate hikes if it also sees strong data from the labour market. Affected markets: USDCAD, EURCAD.

Oil inventory data (Wednesday, 3:30pm GMT)

Oil prices reversed lower in the final week of March and a buildup of inventories was among factors that contributed to this decline. Traders want to see if inventories in the US continue diving below the 5-year average, a development that could be crucial if a price rally is to be maintained. Affected markets: OIL, OIL.WTIlink do file download link

 Yesterday’s US-Canadian data pack sent USDCAD higher. Will labour market data mix scheduled for release next week turn out to be more favourable for Loonie? Source: xStation5