The US economy continues to recover, as consumer spending showed strong gains in March. The Eurozone continues to grapple with high Covid rates and many parts of Western Europe are under lockdown. In the UK, a successful vacccine rollout has led to further easing in health restrictions.
In the upcoming week, the ECB and Bank of Canada will hold policy meetings. The UK releases key inflation and employment data.
Eurozone CPI posted a gain of 1.3% in March, up from 0.9% a month earlier. Inflation remains below the ECB target of 2% but is gaining strength.
- Canada Budget Release: Monday, Tentative. The Trudeau government releases its first budget in two years. The government is expected to pledge tens of billions of dollars in spending to boost the economic recovery, as the government eyes a possible election later in the year.
- UK Employment Report: Tuesday, 6:00. Wage growth has been at high levels. In January, wage growth came in at 4.8% and the estimate for February stands at 4.7%. Claimant Change jumped to 86.6 thousand in February and is expected to fall to 24.5 thousand in March.
- UK Inflation: Wednesday, 6:00. With lockdown restrictions easing, inflation is expected to move higher. Headline CPI is projected to rise from 0.8% in March, up from 0.4%, while Core CPI is expected to climb from 0.9% to 1.1%.
- Canada Inflation Report: Wednesday, 12:30. The recovery is gaining traction, but CPI remains well below the BoC target of 2 percent. We await the headline and core inflation releases for March.
- BoC Rate Decision: Wednesday, 14:00. With the economic outlook improving more quickly than anticipated, the BoC could announce a tapering of QE at the upcoming meeting. If so, the BoC would be the first G-7 central bank to tighten policy since the Covid-19 pandemic.
- ECB Rate Decision: Thursday, 11:45. The ECB is expected to maintain its current policy. The market will be focusing on the rate statement and looking for any comments on inflation or the emergency pandemic program.
- US Manufacturing PMI: Friday, 13:45. Manufacturing continues to show strong growth, as the PMI came in 59.1 in February. The March forecast stands at 60.6. The 50-level separates contraction from expansion.
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