During the week ahead the market is likely to look towards a number of key market themes and events which have the potential to dictate financial market moves.
The economic calendar is jammed packed with central bank and jobs action this week as the Reserve Bank of Australia decide on rates while the US economy reveals the latest payrolls and manufacturing data.
US non-farm payrolls
The United States economy release the first major jobs report since the SVB and Silvergate crisis, which could well have sparked job losses and a lack of confidence.
Since the last report some of the largest tech firms have revealed major job lay-offs, however, this has not really shown up in the weekly jobs data, which is a good sign.
The tight labour market is likely to support the Federal Reserve’s plans to keep interest rates higher for longer, despite concerns over financial stability due to the Silicon Valley Bank fallout.
This Friday’s non-farm payrolls report is expected to show that the US economy added 221,000 jobs in March, with the unemployment rate stable at 3.6%.
Average hourly earnings are up 0.3% month-on-month, according to consensus estimates. If these predictions come to pass, then this may well just be enough to give positive sentiment alive in financial markets.
RBA interest rate decision
Interesting times at the central bank of Australia as many pundits predict that we could be about to see a material shift in thinking for the Reserve Bank of Australia.
Inflation in Australia remains high but is declining from its peak, leaving a finely balanced interest rate call for the Reserve Bank of Australia board this Tuesday.
Headline inflation in Australia slowed to 6.8% in February, down from 7.4% in January, potentially giving policymakers the confidence to maintain the current interest rate.
The recent turmoil in financial markets may add to policymakers’ caution. The data-driven approach to setting rates opens up the possibility of a pause in the rate-hiking cycle when the RBA meets tomorrow.
The odds of an interest rate increase are probably around a 50-50-coin toss for the nine-member RBA board, who may just be tempted to stop at the current 3.6 per cent cash rate.