ECB Rate Decision and U.S. Non-Farm Payrolls May Impact Global Sentiment

This week is full of major event risk with several rate decisions and the U.S. Non-farm payroll report on Friday which could potentially add to increasing optimism and send global equity markets higher. The [B]Reserve Bank of Australia[/B] will start things on Tuesday and is expected to keep their target rate at 3.00% which could disappoint investors who may be looking for additional stimulus. Australian retail sales expected to rise by 0.5% and the employment change predicted to drop by 25,000 will give conflicting signals latter in the week.

[B]Weekly Outlook May 4th – 8th [/B]

This week is full of major event risk with several rate decisions and the U.S. Non-farm payroll report on Friday which could potentially add to increasing optimism and send global equity markets higher. The [B]Reserve Bank of Australia[/B] will start things on Tuesday and is expected to keep their target rate at 3.00% which could disappoint investors who may be looking for additional stimulus. Australian retail sales expected to rise by 0.5% and the employment change predicted to drop by 25,000 will give conflicting signals latter in the week. Speaking of consumption Euro-zone retail sales are forecasted to rise by 0.1% but that mat get overlooked with the [B]ECB rate decision[/B] scheduled for Thursday. The central bank is expected to cut rates by 25 bps points, but markets will be looking to see if policy makers will initiate non-standard measures. A rate reduction and additional efforts to improve credit markets and boost the economy could send European shares higher. The[B] BoE rate decision [/B]will precede the ECB but isn’t expected to have a significant impact as markets are forecasting that they will keep their benchmark rate at 0.50%. The MPC stated last month that it would take two months for their initial government bond purchasing program to be completed. Therefore, don’t expect a statement following the policy meeting as nothing has changed. PMI construction and industrial production are expected to show relative improvements from the month prior which could give U.K. stocks a lift. The [B]U.S. Non-Farm payroll report [/B]may be the biggest release for global sentiment. I considerable improvement in the labor market could spur hope of a U.S. recovery which would bring the global economy which is expected to drag the global economy along with it. Forecasts are for a job loss of 610,000 which would be down from last month’s 663,000. A print below 600,000 could send U.S. equity markets higher as they have already started to price in a recovery.