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The Week Ahead: US jobs report, PMIs, eurozone CPI

Welcome to Michael Kramer’s pick of the top three market events to watch in the week beginning Monday 1 April, (below), and watch our week ahead video preview (above) from RRG Research's Trevor Neil. 

The first week of April is filled with lots of economic data looking back at March. We won’t have to wait long either, with the release of the March ISM manufacturing report on 1 April, followed by the eurozone CPI inflation report, the ISM services report on 3 April, and the March US employment report on 5 April. All of this data has the potential to be have an impact on the markets, including across forex, indices, shares and rates. 

US purchasing manager indices 

Monday 1/Wednesday 3 April: Analysts estimate the US ISM manufacturing index for March will improve to 48.4 from 47.8, while the new order index is expected to rise to 49.8 from 49.2 – both showing the sector is still in contraction, but moving closer to expansion with a reading above 50. The prices paid index was 52.5 last month; a higher number could indicate a rise in the cost of goods. 

On 3 April, US ISM services is expected to come in at 52.8, up from 52.6 last month. The critical component could be the services price paid index, which registered 58.6 last month. A higher reading could indicate that service inflation in the US, which has been persistent is not coming down – or worse, accelerating.

Better-than-expected ISM data could cause the market to continue to reduce the odds of US rate cuts, while weaker data could result in the market pricing in more rate cuts. This means that the 2-year yield may see the most significant impact from this data. It’s found strong resistance at 4.75%, and better data could lead to it breaking out and pushing beyond resistance. Meanwhile, weaker data could result in a move lower to around 4.5%, with a break of 4.5% potentially confirming a double top pattern and a drop back to 4.20%.

Eurozone consumer price index

Wednesday 3 April: Headline eurozone CPI for March is expected to see prices rise by 0.7% month-on-month, up from 0.6% last month, and by 2.6% year-on-year, in line with the previous month. Core CPI is expected to rise by 3% year-on-year, down from 3.1% last month.

The euro, which has been consolidating recently, could be most impacted by these results. However, the euro is now in a spot versus the US dollar, which could end that consolidation. A hotter CPI report for the eurozone could result in the euro breaking higher, heading to resistance at 1.095, while a weaker report could result in support breaking at 1.08, resulting in a drop to 1.07. Moving to 1.095 or 1.07 would result in the euro moving outside the consolidating wedge.

US employment report

Friday 5 April: Analysts are forecasting the US economy will have added 216,000 jobs in March, down from 275,000 in February. Meanwhile, the unemployment rate is expected to fall to 3.8% from 3.9%, while average hourly earnings are estimated to rise by 0.3% month-on-month, from 0.1% last month.

Equity markets in the US tend to see a lot of unexpected volatility around this report, leaving many investors wondering why some reports send the market higher and some lower, even though the data doesn’t correspond to the movement. For that, one must turn to the VIX 1-day and see where the closing level is. The higher the implied volatility, the more likely the equity market will rally no matter the data, even if the rally is short-lived.

To create a large rally in the S&P 500 or the Nasdaq 100, the VIX 1-day will have to reach around 20 the day before the report. Past job reports haven’t seen implied volatility levels get high enough to create a large rally, such as 22 February, the day after the Nvidia report, or 12 March, the day after the CPI report. If implied volatility gets high enough the day before, it could create one of those head-scratching equity market rallies.

Key economic and company events

Here’s our rundown of notable economic announcements and company reports scheduled for the coming week: 

Monday 1 April 

  • China purchasing managers index – manufacturing 
  • US purchasing managers index – manufacturing 
  • Results: AST SpaceMobile (Q4); Nano-X Imaging (Q4); PVH Corp (Q4)

Tuesday 2 April

  • Reserve Bank of Australia monetary policy meeting minutes
  • Eurozone purchasing managers index – manufacturing 
  • UK purchasing managers index – manufacturing
  • US durable goods
  • Results: Cal-Maine Foods (Q3); Dave & Buster's Entertainment (Q4); Paychex (Q3), Renew (HY)

Wednesday 3 April

  • China purchasing managers index - services
  • Eurozone consumer price index; unemployment rate
  • US EIA weekly petroleum status report – crude oil stocks; Federal Reserve chair Jerome Powell speech
  • Results: Acuity Brands (Q2); Exxon Mobil (Q1); Hilton Food Group (FY); Impax Environmental Markets (FY); Levi Strauss (Q1)

Thursday 4 April 

  • Eurozone purchasing managers index – services; producer price index
  • UK purchasing managers index – services
  • US unemployment claims; trade balance
  • Results: Conagra Brands (Q3); Kura Sushi (Q2); Lamb Weston (Q3); Linday (Q2); Radius Recycling (Q2); RPM International (Q3); Simply Good Foods (Q2)

Friday 5 April 

  • UK purchasing managers index – construction
  • US non-farm payrolls; unemployment rate; average earnings 
  • Results: Ermenegildo Zegna (FY)

Note: While we check all dates carefully to ensure that they are correct at the time of writing, the above announcements are subject to change.

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