Weekly Outlook: April 1 – 5

Investing.com – This week investors will be looking ahead to Friday’s U.S. government employment report for March, with figures on wage growth likely to be closely watched after the Federal Reserve appeared to rule out the likelihood of any rate hikes this year.

Investors will also get an update on U.S. retail sales and manufacturing activity.

The economic reports take on added significance after the U.S. bond market flashed a recession warning when 10-year Treasury yields fell below three-month Treasury bill yields for the first time since 2007 earlier this month.

High level trade talks between the U.S. and China will also remain in focus as Chinese Vice Premier Liu He comes to Washington to meet with U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin.

There are also Brexit headlines to monitor amid fears that no withdrawal deal will be reached before the April 12 deadline.

The British pound came under pressure on Friday, with GBP/USD falling to a low of 1.2979, before pulling back to 1.3033 in late trade.

The currency remained well above lows hit in December, in part because “markets have begun to price in a long delay and that’s risk and sterling positive,” said Greg Anderson, global head of foreign exchange strategy at BMO Capital Markets.

Sterling’s move underpinned the U.S. dollar index, which was last up 0.05% to 96.81, helping it recover from an earlier drop on the weaker-than-expected report of U.S. inflation data, which added to the conviction that the country’s economy is losing momentum.

U.S. consumer spending barely rose in January and income increased modestly in February. The report from the Commerce Department also showed price pressures muted in January, with a measure of overall inflation posting its smallest annual increase in nearly 2-1/2 years. Consumer spending accounts for more than two-thirds of American economic activity.

With growth slower and inflation benign, Friday’s data bolstered the Fed’s case for ending its three-year monetary tightening campaign.

“It was a soft number,” said Anderson. “It is a relief that there’s no reason for the Fed to have to raise rates.”

The euro on Friday was headed for its worst month since October, weighed down by fears about economic growth and cautious signals from the European Central Bank. Policymakers cut growth forecasts for the euro zone economy earlier this month and launched a new round of cheap loans to its banks.

EUR/USD was a tad lower at 1.1216, down 1.43% for the month.

Ahead of the coming week, Investing.com has compiled a list of significant events likely to affect the markets.

China is to publish its Caixin manufacturing PMI.

The U.K. is to release data on activity in its manufacturing sector.

The euro zone is to publish preliminary inflation data.

The U.S. is to report on retail sales and the Institute of Supply Management is to publish its manufacturing index.

Bank of Canada Governor Stephen Poloz is to speak.

Australia is to publish data on building approvals.

The Reserve Bank of Australia is to announce its benchmark interest rate and publish a rate statement, which outlines economic conditions and the factors affecting the monetary policy decision.

The U.K. is to publish data on construction sector activity.

The U.S. is to report on durable goods orders.

Australia is to release data on retail sales and trade.

China is to publish its Caixin services PMI.

The U.K. is to release data on service sector activity.

The U.S. is to publish the ASD nonfarm payrolls report and the ISM non-manufacturing index.

Germany is to release data on factory orders.

The European Central Bank is to publish the minutes of its latest monetary policy meeting.

Financial markets in China will be closed for a holiday.

In the euro zone, Germany is to report on industrial production.

Canada is to publish its monthly employment report.

The U.S. is to round up the week with the government nonfarm payrolls report for March.