The Chairman of the Federal Reserve, Jerome Powell, emphasized the importance of incoming economic data in guiding future policy decisions during his recent speech at Stanford University. Powell highlighted the economy's robustness and the progress made on inflation, suggesting a patient approach to policy adjustments.
Attention turns to this week's economic indicators, with analysts anticipating the latest weekly jobless claims to reflect ongoing labor market strength. Predictions suggest a slight increase to 214,000 from the previous week, consistent with the six-month average and not indicative of a weakening labor market.
Market participants are particularly keen on the release of March's nonfarm payroll data, which could significantly impact market dynamics. Expectations are set for a decrease in job additions to 200,000 in March from February's 275,000, despite a trend of recent data surpassing forecasts.
A recent report from the Institute for Supply Management showed unexpected weakness in the service sector, with a notable decline in price growth to a four-year low, hinting at possible vulnerabilities in the U.S. economy. This development contributed to a slight depreciation in the dollar and maintained high levels in the 10-year Treasury yield.
In currency markets, the focus remains on the Japanese yen's performance, which hovers near a 34-year low, raising speculation about potential intervention by Japan to support its currency. Meanwhile, the S&P 500 experienced a modest increase, staying close to its recent peak despite a shaky start to the quarter.
European stocks saw a slight uptick, and oil prices reached a five-month high. A divergence in rate cut expectations between the U.S. and Europe is becoming more pronounced, with the market anticipating less aggressive cuts from the Fed compared to the European Central Bank.
Inflation data from the Eurozone and Switzerland showed a decrease, moving closer to their respective central banks' targets. The U.S. is set to release its March consumer price inflation figures next week, following a 3.2% inflation rate in February.
Several Federal Reserve officials, including Patrick Harker and Loretta Mester, are scheduled to speak, potentially providing further insights into the central bank's outlook following comments from Raphael Bostic of the Atlanta Fed hinting at a possible rate cut in the fourth quarter.
Key events to watch include the U.S. weekly jobless claims, trade balance data, minutes from the ECB's March meeting, and speeches from Federal Reserve officials.
