RBC Capital Markets

Overnight: A mixed batch of China PMIs overnight. The official April manufacturing PMI showed a drop from the previous month’s reading, but the Caixin manufacturing PMI, which is more focused on private sector export-oriented firms, exhibited a rise. In any event, there is general expectation of a gradual slowdown in China’s growth rate from the first quarter, so the data overall seems to suggest that. Meanwhile, Beijing has expanded its crackdown on the fintech operations of domestic Internet giants.

US Q1 GDP growth was a solid 6.4% q/q annualised, though slightly below expectations. Weekly jobless claims slid to a new cycle low, indicating a tightening labour market as the pandemic slackens its grip on the US. The Canadian dollar has made further gains overnight as oil prices climbed.

Day ahead: The main data releases are euro area ‘flash’ CPI (see EUR), euro area Q1 GDP, Taiwan Q1 GDP (see TWD), Canada February GDP (see CAD), and US personal income & spending, including the Fed’s preferred core PCE inflation indicator. The France and Germany Q1 GDP reports will be released ahead of the euro area figure. SNB President Jordan will be speaking at the bank’s general meeting.


In contrast to NY, Asia has seen comparatively calm price action, with AUD and NZD notching mild gains vs the USD, and most other currencies trading unchanged vs the NY close. Equities remain on edge though following V shaped price action in the S&P on Thursday, and related volatility in USTs. In terms of developments overnight, there was little to report away from misses in official China April PMIs, though there is no need for over-concern on PMI declines per Citi Economics. USDCNH also echoes this trading broadly unmoved by the data.

Looking ahead, EUR could see some pressure from weak forecasts for Q1 Germany and Eurozone GDP, as well as CPI data. USD looks to core PCE, while CAD awaits February GDP. In EM, we see CZK, TWD and MXN GDP, TRY trade data, BRL unemployment and a COP rate decision (hold).

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