Looking back at the previous week and taking a look at the first couple of days of this week, one thing is painfully clear: there was not a lot of meaningful data released, and the Fed will have slim pickings of data before the US FOMC in the first week of May. The fact that the FOMC will have very little data to consider when it makes its decision in a week is also significant, as this will undoubtedly tip the scales in favour of a 25-basis-point increase in interest rates.

Cuts coming in 2024

The market is currently drifting sideways, and it seems that the market is gearing all it has – at least for the short term – towards the FOMC meeting and the US dollar traded between 1,0850 and 1.1000 against the euro for the most part. The volatility between this range is down to various Fed speakers robustly claiming that further hikes are on its way versus the markets that are pricing in Fed cuts at the back end of the year, once the effects of the accelerated hiking cycle have washed through the market.

Despite the data cupboard being almost empty, especially from a US standpoint, the US Quarter-on-Quarter GDP number for Quarter 1 and the Core PCE Month-on-Month number will be released on Thursday and Friday, respectively. While these numbers do not have the same ring to it as US non-farm payroll numbers or CPI, they may have an effect on the market due to the fact that there is very little else being released on the US front, which will magnify the significance of this data.

Global Food Inflation is soaring 

GDP and Inflation numbers in Europe

On the European side of the coin, some interesting data will be published on Friday, including a slew of GDP and inflation figures. All the major countries’ GDP in the Eurozone as well as the collective number will be released, with France and Germany also releasing their inflation numbers. If growth has not taken a knock due to the interest rate hikes by the ECB and inflation is still sticky, we could see the euro on the front foot, which means the ECB still has some room to hike interest rates forward.

Rand needs fresh momentum

The rand was stuck between R18.00 and R18.50 for the most part of the month, and the currency is in need of some fresh momentum in order to break toward any side. The rand has hardly moved when the US dollar is on the back foot, which only suggests that the risk premium currently in the rand is fairly well entrenched and a catalyst is needed for the rand to make gains going forward.