Market movers ahead
Signals about the direction of ISM manufacturing in April are mixed, so we expect it to stay around the current level, only slightly above 50.
The US jobs report is due on Friday and we expect another solid increase of 210,000. As long as employment continues to rise at a solid pace, we think the Fed will focus on wage growth. We estimate average hourly earnings rose 0.3% m/m.
The Bank of England meeting seems likely to be a non-event on paper but any comments on Brexit and uncertainties in either the minutes, the inflation report or at the press conference could have the potential to move markets.
In the euro area, we look for an increase in Sentix investor confidence. We estimate both German factory orders and industrial production for March increased, as the uncertainty seen at the start of the year has eased.
Inflation figures for April are due in Denmark and Sweden. In Denmark, we estimate inflation increased to 0.2%, while for Sweden we estimate an outcome a notch or two below the Riksbank's latest forecast.
EUR/DKK has traded below central parity in April and the FX reserves figures will show whether the Danish central bank had to intervene in order to weaken the DKK.
We expect Norges Bank to keep rates unchanged in May but the bank may signal that a rate cut in June is now more or less likely than it was at the March meeting.
Global macro and market themes
The BoJ's inaction may be due to the economy doing better than many envisaged. The pickup in global inflation is flying under the radar, in our view.
Upside risks to the long end of the EUR swap curve are rising on oil, global IP, reduced Brexit risks and issuance.
The USD is set to weaken short term against emerging market currencies and the JPY and to strengthen against the EUR.
Emerging market equities are set to rally further on China and metal prices.
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