Top 5 Economic Calendar Events April 23-29

Europe is likely to dominate market trends for much of the week with the French election and ECB meeting.

Any comments on the dollar and economic policy by US President Trump will, however, continue to have an important potential market impact.

The Bank of Japan will hold its latest policy meeting on Thursday local time, although policy should be left on hold.

The UK GDP data will be released on Friday, although developments surrounding politics are likely to dominate. Geo-political issues will continue to be watched closely, with the North Korean situation still an important market focus with a major impact if there is a nuclear test.

The overall tone surrounding risk appetite will be important in determining trends in equities and precious metals.

1. French Presidential election

The first round of the French Presidential election will be held on Sunday April 23rd.

The final polls have continued to suggest a complex picture with four candidates in the running for the two places in the second-round run-off, which will be held on May 7th.

Exit polls are expected to be released at 14.00 ET Sunday, with the final vote count due in early Europe on Monday. The significant number of potential permutations will increase underlying uncertainty, especially with a large number of undecided voters.

The elimination of both Fillon and Macron would create major uncertainty over economic direction and unsettle market confidence to a major extent with fresh doubts over the Euro’s future. There would be the probability of heavy selling pressure on the Euro and French bonds.

The elimination of both Melenchon and Le Pen would have a major impact in boosting market confidence surrounding the Euro outlook with robust gains for the single currency and a loss of support for German bonds.

There would tend to be modest net relief if either Macron or Fillon make the second round.

There is the potential for substantial gaps at the Asian market open and uncertainty could extend into Europe if the vote is very close.

Reaction to the vote and potential internal alliances will also be an important factor throughout the week.

2. ECB policy decision

The ECB will announce its latest monetary policy decision on Thursday April 27th at 07.45 ET.

ECB President Draghi will hold his regular post-meeting press conference at 08.30 ET.

The Eurozone data has continued to show momentum within the economy, with gains in employment and a solid growth in both consumer spending and industrial production. The April PMI data strengthened to the highest level for six years.

The ECB has recognised that the economy is improving, but is still concerned that there has been no increase in underlying inflation. It is also very uneasy over the fact that rumours surrounding a policy change would trigger a surge in yields and the Euro.

Politically, there will also be a reluctance to change policy during the French Presidential election.

The main focus for the ECB at this meeting is likely to be the control of expectations. Draghi and a majority of the Council will want to avoid a gathering of expectations that there will be a policy shift.

There will, however, be dissenting voices within the Council with the more hawkish policy members looking for a tapering of quantitative easing.

The more hawkish policy members will probably have to be satisfied with a promise to review policy at the June policy meeting.

The most likely outcome is that the ECB will shift policy over the second half of 2017, especially if there is no disruption from the French Presidential election, but there will be a major reluctance to make any significant changes in rhetoric at this meeting.

3. US Q1 GDP

The US advance reading of GDP Q1 data will be released on Friday April 28th at 04.30 ET.

The advance reading for US first-quarter GDP data is based on limited data and is subject to substantial revisions.

There will be expectations of a sharp dip in the GDP growth rate for the first quarter. The evidence suggests that there has been a slowdown in consumer spending for the last three-month period with lacklustre data on retail sales.

The investment data will be watched closely given the importance for the Federal Reserve, which has been more optimistic surrounding the recent data.

The trade data could also have important political implications following a negative contribution for the fourth quarter.

The latest US consumer confidence data will be released on Thursday, with the durable goods orders release also on Thursday.

4. Australia consumer prices

The latest Australian CPI data will be released on Wednesday April 26th local time (21.30 ET Tuesday 25th).

Inflation trends will continue to have an important market impact on Reserve Bank of Australia (RBA) monetary policy expectations. The importance of the data is increased by the fact that Australia only releases inflation data quarterly.

The RBA has been more cautious surrounding the economic outlook over the past two months and there has been increased concerns surrounding vulnerability in the housing sector. The RBA has also been less confident surrounding the labour market.

The RBA is particularly concerned that growth in household credit is continuing to outpace growth in incomes. There will, however, be a delayed impact from macro-prudential measures introduced to cool excess borrowing.

A notably weak inflation reading would spark fresh speculation over policy easing, although the bank would prefer to wait for further evidence before taking any action.

5. European Council Meeting

The European Council will meet on Saturday April 29th.

The European Council will hold a special session in order to adopt the guidelines for Brexit negotiations. Draft guidelines were presented by Council President Tusk at the end of March and this meeting will set the tone for negotiations.

There will be no actual negotiations in the short term with the UK holding a general election on June 8th and the French Presidential election will also not be concluded.

The overall rhetoric within the meeting will be important in indicating the likely tone once negotiations get underway.

In particular, the extent to which individual countries appear divided or can present a united front will be a key influence. Evidence of a tough stance would tend to undermine Sterling.

The Council meeting will also be important if no mainstream candidates reach the second round of the French Presidential election as the EU would face a major political crisis.

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Tim is a contributing author to EconomicCalendar.com. He is an economist and has been involved in financial markets for over 20 years as an analyst. He specialises in global economic trends, macro policy and central banks. Extensive knowledge, experience and data mining is used to anticipate trends in equities, bonds and forex with a contrarian slant. He is a graduate of the University of York with a degree in Economics/Econometrics.