- Economic indicators like Q1 GDP and March core PCE deflator will affect the US dollar and tech stocks.
- Diverging central bank policies, especially among the Fed, ECB, and BoE, could impact currency and equity markets.
Upcoming key economic indicators could reinforce the strength of the US dollar and the weakness in stocks over the coming week. Thursday’s release of first-quarter gross domestic product and Friday’s unveiling of the March core PCE inflation, the Federal Reserve’s favored gauge of inflation, are the most anticipated events.
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Regarding the core PCE, analysts expect a 0.3% uptick on a seasonally adjusted basis, nudging the 12-month figure down to 2.6% from the previous 2.8%. While this shift suggests a modest move in the right direction, it underscores the persistent challenge of containing inflationary pressures.
Investors could interpret this as a signal that the economy is still operating at full throttle. Such a scenario could favor a cautious approach by the Federal Reserve, possibly delaying any rate cuts. Meanwhile, counterparts like the European Central Bank and the Bank of England seem to be leaning towards adopting more accommodative policies. The diverging outlooks between these major central banks could inevitably ripple through currency and equity markets.
Speaking of equity markets, traders are bracing for perhaps the busiest earnings week on the calendar, particularly with major tech players such as Alphabet, Amazon, Microsoft, and Meta set to report. Additionally, attention will be on companies like Visa, Tesla, Lockheed Martin, IBM, Boeing, Intel, Exxon Mobil, AbbVie, and Spotify.
