RBC Capital Markets

Day ahead: US March retail sales are the main release today and the combination of recovery from February weakness and the income boost as stimulus cheques arrived should ensure a very strong release. Consensus is for a 5.8% m/m increase (5.0% ex‐autos) and our economists look for increases closer to 7% in both cases.

We also get the first fixes on April business confidence (Philly Fed and Empire surveys) and both releases are expected to remain strong. The calendar in Europe is very light, with just final March CPI in various countries due.

China’s March andQ1 activity data are all out overnight and will continue to be dominated by powerful positive base effects. The Q1 earnings season is now going strong with Citi and BoA due to report before the open today.


Asia has seen markets trade in a holding pattern following no surprises from Fed Chair Powell overnight, and before a raft of top tier USD data today (jobless claims, retail sales, industrial production). Ahead of this, we see most currencies unchanged vs the NY close, with the exception of AUD which underperforms despite another employment data beat. EM FX for the most part is also seen flat except for CNH which underperforms too.

Data today away from the US is predominantly concentrated in EM, with TRY (hold) and UAH (50bp hike) rate decisions due, COP manufacturing production and PEN economic activity. KRW’s BoK held rates overnight as expected, though the bank outlined upside risks to both growth and inflation.

USD: Comments from Fed Chair Powell on Wednesday came broadly in line with previous guidance. He confirmed that there were three goals the economy must meet before the Fed begins to considering hiking rates:

i). Recovery in labor market is effectively complete (i.e. full employment with U-3 around 3.5%)

ii). Inflation has “sustainably reached” 2%

iii).That inflation will then be on track to “run above 2% for some time.” Substantial further progress towards these goals remains the hurdle to tapering, though could be achieved in line with Fed’s Bullard earlier in the week stating that taper discussions can potentially begin once the US reaches a national vaccination rate of 75-80%, which would reinforce progress towards the above conditions

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