The first week of the month is always jam-packed with tier one data, and this one is certainly no exception. The central banks take to the stage this week, with the FOMC meeting looming large. A rate hike is guaranteed and is almost nailed on to be a double hike of +50 basis points. However, elsewhere the decisions look far more nuanced, with the Bank of England (BoE) and the Reserve Bank of Australia (RBA) to be watched. However, the monetary policy announcements do not stop there, with central bank decisions for Lat Am countries such as Brazil and Chile. Add in the PMIs, inflation, and the Non-farm Payrolls report and there is something for everyone this week.

Watch for: 

  • North America – The FOMC is key, with ISM Manufacturing and Services and Non-farm Payrolls also on the docket
  • Europe & Asia – The RBA and BoE announce monetary policy, with several PMI and unemployment data for the Eurozone.
  • LatAm – Central bank decisions in Brazil and Chile, with inflation for Colombia and Chile too.

North American data:

  • ISM Manufacturing (Monday 2nd May, 1500BST) Consensus is expecting a slight improvement to 58.0 in April (up from 57.1 in March).
  • US Factory Orders (Tuesday 3rd May, 1500BST) Orders are expected to increase by +1.2% in March (after a decline of -0.5% in February).
  • US JOLTS jobs openings (Tuesday 3rd May, 1500BST) Analysts are looking for openings to remain broadly level at 11.27m in March (11.27m in February), with the Quite Rate also remaining steady at 4.36m (4.35m in February).
  • US ADP Employment (Wednesday 4th May, 1315BST) The consensus is expecting the rate to fall to 370,000 in April (down from 455,000 in March).
  • US ISM Services (Wednesday 4th May, 1500BST) The ISM is expected to increase slightly to 59.0 in April (from 58.3 in March)
  • FOMC monetary policy (Wednesday 4th May, 1900BST) The Fed is expected to increase rates by +0.50% to 1.0%.
  • Nonfarm Payrolls (Friday 6th May, 1330BST) Headline jobs are expected to increase by +400,000 in April (431,000 in March), with unemployment at 3.6% (3.6% in March) and Average Hourly Earnings to remain at +5.6%.
  • Canada Unemployment (Friday 6th May, 1330BST) The rate is expected to remain at 5.3% in April 

The Federal Reserve has a huge meeting this week. With the magnitude of the inflationary pressure that has built up over recent months, the clamor for more aggressive monetary policy tightening has grown ever more significant over. Markets have entirely priced in a +50 basis points hike at this meeting (to 1.00%). Although we will not be getting updated economic projections or “dot plots” of interest rate projections, how the Fed guides for further rate hikes will be key. Interest rate futures are suggesting another 6 hikes this year, maybe even 7. The Fed’s intent toward running down the asset purchases on the balance sheet will also be another issue for market participants. The question has the Fed reached peal-hawkishness? This FOMC meeting may suggest it is close.

The US ISM data have tended to be tracking lower in recent months, but there was a small uptick for the Services data in March which is again expected to be seen in April but also joined by an improvement in Manufacturing too. This would point to a decent start to Q2 for the economy and help to suggest that the Q1 GDP decline was something of an anomaly.


Nonfarm Payrolls will be the final focus of the week when the US Employment Situation is released on Friday. The headline jobs number is expected to reduce slightly, whilst unemployment is holding around 3.6%, close to the pre-pandemic lows of 3.5% and the participation rate is expected to improve again. Average Hourly Earnings are expected to hold at 5.6% which is a near two year high but also would help to build a picture of a potential plateauing of inflationary pressures.  

Market Reaction: 

  • Lots of data throughout the week to impact USD. Can the Fed be any more hawkish than it already is? Market reaction to this FOMC (on Treasury yields and USD) will be a key gauge.

Europe & Asia:

  • Reserve Bank of Australia monetary policy (Tuesday 3rd May, 0530BST) The consensus is looking for a potential +15 basis point rate hike to +0.25% (from +0.10%)
  • UK Manufacturing PMI - final (Tuesday 3rd May, 0930BST) Analysts are not expecting any change to the flash reading of 55.3 in April (55.2 final March).
  • Eurozone Unemployment (Tuesday 3rd May, 1000BST) Unemployment is expected to remain at 6.8% in March.
  • New Zealand Unemployment (Tuesday 3rd May, 2345BST) The rate is expected to improve slightly to 3.1% in Q1 (down from 3.2% in Q4).
  • Eurozone Composite PMI - final (Wednesday 4th May, 1000BST) Consensus is looking for the Composite PMI to be unrevised at 55.8 in April (up from 54.9 in March)
  • UK Composite PMI - final (Thursday 5th May, 0930BST) The UK Composite PMI is expected to be unrevised at 57.6 in April (down from 60.9 in March)
  • Bank of England monetary policy (Thursday 5th May, 1200BST) The BoE is expected to hike by +25bps to 1.00% (from 0.75%)
  • Japan core CPI (Friday 6th May, 0030BST) Core inflation is expected to increase slightly to 0.9% in April (from 0.8% in March)

This could be a tale of rate hikes from two central banks. On the one hand, there is a potential first-rate hike from the Reserve Bank of Australia. Rising inflation and mounting wage pressures are driving expectations of tighter monetary policy from the RBA that could see rates up to 1.50% by the year-end (according to a Bloomberg survey). The uncertainty of a hike and the potential size of the hike would suggest volatility in AUD. Consensus is for +15basis points (to +0.25%) but +40bps (to +0.50%) cannot be ruled out. 

On the other hand, is the Bank of England, which was much more cautious at the last meeting. A 25bps hike is expected (to +1.00%) but how unanimous will the decision be? An 8-1 split is expected but any less than the 8 would be seen as another dovish indication. SONIA interest rate futures still suggest as many as 6 more hikes this year, but this looks very steep. This could be the meeting that signals a hauling back of this expectation.

Elsewhere in the data, the PMI data is mostly just revisions of the flash April data released over a week ago. The major economy unemployment rates are expected to remain either steady or continue to improve, whilst Japanese core inflation is expected to increase slightly. 

Unemployment rates

Market Reaction: 

  • AUD and GBP will be volatile around their central bank announcements. Hikes are expected but forward guidance on further tightening may be a key takeaway.
  • Any significant revisions in the final PMIs will impact the respective currencies.

Latin America:

  • Brazil central bank interest rates (Wednesday 4th May, 2200BST) The bank is expected to hike by +100bps to 12.75% (up from 11.75%)
  • Chile central bank interest rates (Thursday 5th May, 2300BST) A +100bps rate hike to 8.00% is expected (from +7.00% previously)
  • Colombia CPI (Friday 6th May, 0100BST) Inflation is expected to increase to 8.62% in April (from 8.53% in March)
  • Chile CPI (Friday 6th May, 1300BST) Headline inflation is expected to increase to 10.0% in April (from 9.4% in March)

With inflation pressures still rising, the central banks are being forced into action once more. Another +100bps of hikes for the central banks of Brazil and Chile are expected to ensure rates keep pace with inflation. Consensus forecasts are generally spot on with the actual with Brazil but have a sketchy record with Chile. Hikes of +150bps have been seen in the past few rate moves. Will this trend be bucked with only +100bps this time? With inflation jumping considerably in March to 9.4%, there is an upside risk to the interest rate forecast. 

LatAm inflation

Market Reaction

  • Given the lack of accuracy in the consensus regarding Chilean rate hikes, CLP is likely to be volatile around the central bank’s decision. 

This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. INFINOX is not authorised to provide investment advice. No opinion given in the material constitutes a recommendation by INFINOX or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.