FX Week Ahead: China GDP, New Zealand, and Canada inflation

Following a rather eventful week, the markets are likely to head into a new trading week with risk aversion staying on trader’s minds. Economic data this week is mostly confined to second-tier data from the U.S. and from Europe.

Inflation continues to remain the main theme with numbers expected from the eurozone, New Zealand and Canada.

The week starts off with data from China standing out as economists are expecting to see a modest increase in the GDP numbers. However, the main theme is likely to be the global events which are likely to shape the markets this coming week.

Here’s a quick recap of the key economic events this week.

China GDP expected to rise 6.8%

Amid a quiet trading week ahead, China’s GDP figures will be in focus. Estimates are pointing to the upside with the broad consensus expecting to see a 6.8% increase in the first quarter of 2017.

China’s exports rebounded strongly, by 16.40% on a year over year basis in March. The gains came mostly on account of higher shipments to its major trading partners and a weaker currency.

Imports also advanced for the fourth consecutive month but rose at a moderate pace of 20.3% on a year over year basis which indicated a healthy domestic demand. Based on the above factors, the GDP numbers are expected to come out on the upside.

The GDP numbers come at a time when China has set for itself a 2017 growth target of 6.5%. The Chinese economy grew at a pace of 6.7% in 2016.

Besides the GDP figures, other data includes industrial production numbers which are forecast to rise 6.2% while other data includes the fixed asset investments and the annual retail sales data which is forecast to rise 9.7%.

Eurozone inflation expected to remain tame

The week ahead is quiet from the euro area which will see the release of the inflation figures for the month of March. Following the flash inflation estimates, the consumer prices in the Eurozone are expected to slip back after rising 2% in February. The sharp decline in consumer prices are expected on the back of weaker oil prices.

Economists surveyed are expecting headline consumer prices in the eurozone to rise 1.5%, while core CPI which excludes food and energy prices are expected to rise 0.7%. The inflation data comes ahead of the ECB monetary policy meeting due in the final week of April.

Besides the inflation figures, data this week will also see the flash services and manufacturing PMI numbers which are forecast to post a modest increase in April.

In the Eurozone, the focus will, however, remain on the upcoming French elections which are due on Sunday and the final week of campaigning could keep investors on edge.

New Zealand inflation rate expected to rise

After a slow but gradual increase in the previous quarter which saw New Zealand’s consumer prices rise 0.4% on a quarter over quarter basis which sent the annual inflation rate to 1.3%, expectations are hawkish for the first quarter’s inflation report.

Due on Wednesday, Statistics New Zealand will be reporting on the quarterly inflation numbers. Data is expected to show a 0.8% increase on a quarterly basis, with the year over year inflation rate expected to rise 2%.

This will potentially put the inflation rate at the RBNZ’s target rate of 1% and 3%. The hawkish expectations also come on the back of an increase in food prices which jumped on higher dairy prices.

Despite the upbeat inflation report, the Reserve Bank of New Zealand is expected to hold steady on its monetary policy with any changes expected only by late 2018.