Week Ahead – Risks mounting

Are investors right to be optimistic?

As we head into the second quarter, it seems the list of economic concerns is growing rather than shrinking and yet equity markets find themselves in a very comfortable position. The rebound from the post-invasion lows has been impressive, to say the least, but whether it’s sustainable will become clear in the coming weeks.

Soaring inflation, high commodity prices, aggressive monetary tightening and inverted yield curves are just some of the things concerning investors right now. But what about the companies? Well, we’ll hear from them soon enough as they report on the first quarter which will no doubt be interesting and could determine whether this recovery has legs. Could stocks really find their way back to record highs in this environment?

The job of a monetary policymaker is never easy. Not least in the transparent world we now live in where every speech and decision is heavily scrutinized and then criticized with the benefit of hindsight. The job of reining in inflation while avoiding a recession lies ahead and inverting yield curves suggest they may be on the brink of tipping the economy over the edge.

How hawkish will the Fed become?

Rising tensions create huge uncertainty for Europe

Yen volatile as BoJ defends yield curve control (YCC) policy


Another nonfarm payroll report showed that the labour market remains strong. The focus for many traders will remain on market expectations for how aggressive the Fed will be with the next round of rate hikes.  Everyone on Wall Street will pay close attention to Fed Brainard’s comments on Tuesday. Harker speaks on Tuesday morning, while the minutes are released in the afternoon. Bullard, Bostic, and Evans appear on Thursday.   

A wrath of economic releases will focus on how business activity is holding up given the early impact of the war in Ukraine.  On Monday, the release of factory orders in the month of February should show a steep decline, while the final reading of durable goods confirms orders weakened.  Tuesday contains trade data that could narrow and the ISM services index which is expected to improve. Wednesday is all about the FOMC meeting minutes, which could contain further hawkish clues that could confirm a half-point increase for some traders. Thursday has jobless claims in the morning and consumer credit in the afternoon.  Friday finishes the week off with wholesale inventory data.    


Positive moves are happening in negotiations between Ukraine and Russia but as we’ve seen this past week, tensions are still high between Russia and the West and that is creating tremendous economic uncertainty. Putin’s demands last week for all gas purchases to be made in roubles have seemingly been resolved after the G7 initially rejected them. It highlights the growing hostility and mistrust though between Russia and its biggest natural resource export markets which should ensure volatility in the commodity space remains high and prices probably also for the foreseeable future. That was also reflected in the inflation data which should intensify the pressure on the ECB to start raising rates. Minutes released on Thursday could be of interest. 

Next week offers a broad selection of economic data, although it mostly consists of tier two and three readings.


Governor Bailey is due to speak on Monday and traders will search for interest rate clues. The BoE softened its tone a little after the last meeting and yet markets are heavily pricing in a 25 basis point hike at each of the next five meetings, taking Base Rate to 2% by the end of the year. Bailey may use the platform to push back but probably to little avail given current inflationary pressures and more to come from commodity prices and the higher energy price cap from this month. We’ll also hear from a selection of other members of the MPC next week, while final services and construction PMIs are the data highlights. 


Next week we’ll get the first insight into the effects of sanctions as inflation is seen rising to 16.9% for March, up from 9.2% a month before. It is the start of a very tough period for the Russian economy, with the 5% GDP number expected on Friday for the fourth quarter of last year likely the last good reading for some time. 

South Africa

Only tier three data next week but going forward, traders will be alert to further price pressures as the central bank continues raising rates. Inflation is at the top of the 3-6% target range and commodity prices will only further contribute to that.


Not long ago, the Finance Minister was hoping inflation wouldn’t rise past 50%. Next week, official data – that has at times been called into question – is expected to show CPI inflation hitting 61.6% in March. While that may typically offer some insight into central bank policy going forward, the CBRT is no ordinary central bank and will continue to be driven by economic fantasy rather than inflation. The monetary policy review, when it is finally completed, will tell us more about their plans going forward but you can guarantee rate hikes will not be a part of it.


Caixin Services PMI Wednesday is the only significant data release this week. That follows weak official and Caixin Manufacturing PMIs and this week’s number may disappoint as covid lockdowns bite; a negative for local equities.

China has gone quiet on concrete action after jawboning equities higher two weeks ago and China shares have run out of momentum. However, a RRR cut could come at any stage in Q2, boosting equities in the short term.

China risk is all event-driven right now. Delisting risk of US-listed China companies. Share suspensions in Hong Kong due to delayed audits. Modern Land and Evergrande NEV suspended stock trading in Hong Kong. Developments in the property developer sector are a forgotten but important risk, with offshore bondholders getting exasperated with domestic delaying tactics. US sanctions for trading with Russia. An escalation of Ukraine tensions. Rising oil and metals prices. Finally, the Shanghai covid lockdown has been tightened, and further lockdowns elsewhere for extended periods will threaten growth. The list is long, none of it is good for China’s equities.


The Reserve Bank of India announces its latest policy decision on Friday. Rates should remain unchanged at 4.0%, but there is an upside risk thanks to inflation, a weaker INR and a slew of data showing recovery signs. India’s imported energy bill, even if it is heavily discounted Ural blends, will also feature in the RBI’s thinking if the INR weakens.

The Sensex has performed well over the past week as investor sentiment recovered slightly. India is treading a fine line on Russia sanctions though, and officially incurring the G-7 ire could negatively impact equities. Similarly, if the RBI springs a surprise hike, local equities could move sharply lower.


Australia has a big week ahead with Retail Sales on Monday and the RBA rate decision on Wednesday. Arguably the greatest risk of the two is a change in forward guidance by the RBA, bringing rate hikes forward. The RBA remains ultra-dovish despite a series of strong data points that suggest the economy is verging on overheating like New Zealand. A powerful retail sales print will increase the noise. A change in guidance could spur a large and rapid rally in the AUD, while local equities may take a temporary tumble.

Assuming no risk-off events from Ukraine, AUD/USD has upside potential, having spent all of the past week ranging and consolidating its recent gains. 

New Zealand

No significant data releases. A series of government measures were announced to bring down the cost of living in the past week, but the Reserve Bank of New Zealand remains even further behind the inflation curve than the Federal Reserve. Although record agricultural exports are cushioning the blow, NZ remains at risk of a hard landing this year. 


Japan’s calendar is quiet in the week ahead, with only the trade balance of note on Thursday. Investors will be looking for signs of a surging import bill due to high commodity and energy prices, which could start another round of Yen selling versus the USD, AUD and NZD.

USD/JPY has had a frantic week, rising to 125.00 before falling to 121.50 and then recovering to 122.50. The BOJ bond-buying operation to cap JGB yields helped cap USD/JPY, as did lower US yields and year-end repatriation flows. With year-end past, a rise in US yields could spur another rally in USD/JPY.


No significant data. Investors will be on MAS watch now, with their latest policy announcement due in April, but they don’t tell you when. The MAS is widely expected to tighten monetary policy by increasing the slope of SGD appreciation. Depending on market conditions and the timing of the announcement, that could push USD/SGD sharply lower, albeit temporarily.

Economic Calendar

Saturday, April 2

Economic Events

New York Fed’s Williams gives keynote remarks at the Griswold Center for Economic Policy Studies at Princeton University.

ECB’s Schnabel participates in the annual Ambrosetti Finance Workshop in Cernobbio, Italy.

Sunday, April 3

Economic Events

Hungarian parliamentary elections: PM Orban’s Fidesz party has a small lead  

Monday, April 4

Economic Data/Events

US factory orders, durable goods

Senate Judiciary Committee votes on the nomination of Ketanji Brown Jackson to US Supreme Court

Germany trade

BOE Gov Bailey speaks at Stop Scams Conference

BOE Deputy Gov Cunliffe speaks at European Economics & Financial Centre Distinguished Speakers Seminar

Australia inflation gauge

India Markit manufacturing PMI

Japan monetary base

Singapore electronics sector index, PMI

Spain unemployment

Turkey CPI

Tuesday, April 5

Economic Data/Events

US trade

Fed’s Brainard speaks on unequal impacts of inflation

RBA rate decision: Expected to keep Cash Target Rate unchanged at 0.10%

Australia Markit PMI, consumer confidence

Eurozone Markit services PMI

France industrial production

Japan household spending, Jibun Bank PMI

Thailand CPI

Mexico international reserves

Singapore retail sales, Markit PMI

Wednesday, April 6

Economic Data/Events

Fed minutes

Fed’s Harker speaks on the economic outlook

Oil executives testify on gasoline prices and the House Energy Commerce subcommittee holds hearing

China Caixin composite and services PMI

Eurozone PPI

Germany factory orders

India Markit PMI composite and services

New Zealand commodity prices

Poland rate decision: Expected to raise Base Rate 50bps to 4.00%

Russia CPI

EIA crude oil inventory report

Bitcoin 2022 conference starts

Thursday, April 7

Economic Data/Events

US initial jobless claims

China foreign reserves 

ECB Minutes released for March policy decision

Mexico central bank minutes released

BOE Chief Economist Pill speaks

Fed’s Bullard talks about the economy and monetary policy

Fed’s Bostic and Evans participate in an event on economic mobility and inclusive full employment

UN’s Food & Agriculture Organization release food price index

Singapore foreign reserves

Australia trade

Eurozone retail sales

Germany industrial production

Japan leading index

Mexico CPI

Singapore GDP

Friday, April 8

Economic Data/Events

US wholesale inventories

Canada unemployment

India rate decision: Expected to keep Repurchase Rate unchanged at 4.00%

RBA semi-annual financial stability review

Czech central bank (CNB) minutes

Japan BoP, trade balance, bankruptcies, consumer confidence index

New Zealand ANZ truckometer heavy traffic index

Russia GDP

Spain industrial production

Thailand foreign reserves, forward contracts, consumer confidence

Sovereign Rating Updates

Austria (Fitch)

Finland (Fitch)


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Craig Erlam

Craig Erlam

Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam