Below are the most important global events likely to affect FX and bond markets in the week starting May 5.
A decision by the U.S. Federal Reserve will be the highlight of the coming week, with rates expected to be left on hold and markets expected to focus on the likelihood of rate cuts in coming months as trade tariffs take their toll on the economy.
In Europe, the Bank of England is expected to cut interest rates. Rate decisions are also due in Sweden and Norway.
In Asia, markets will focus on China’s April trade data for signs on how U.S. tariffs are hitting the world’s second-largest economy.
U.S.
The Federal Reserve is due to announce its latest decision on Wednesday and is widely expected to keep interest rates unchanged, even as President Trump has recently put pressure on the central bank to cut interest rates.
For now, inflation remains elevated and recent data suggested the U.S. jobs market remained healthy in April despite Trump’s announcement of widespread tariffs early that month.
Focus will center on the Fed’s accompanying commentary for any signals of whether rates could be cut later this year to prop up the economy due to tariffs. The Fed, however, will need to balance the need to support the economy against concerns about the inflationary impact of tariffs.
The Fed is increasingly concerned about growth and will likely “cut interest rates as soon as it can be reasonably sure that inflation is not spiraling out of control,” Commerzbank analysts said in a note.
U.S. money markets are currently pricing in around 83 basis points of rate cuts by the Fed by the end of 2025, LSEG data show.
Elsewhere, investors will continue to scrutinize economic data for evidence of the extent to which tariffs and the uncertainty surrounding them is impacting economic activity.
The more up-to-date ISM purchasing managers’ survey on the services sector, due Monday, will likely attract the most attention. Trade data for March are due Tuesday, followed by first-quarter productivity and labor costs figures Thursday, alongside weekly jobless claims .
The Treasury will offer three-year notes on Monday, 10-year notes on Tuesday and 30-year bonds on Thursday.
CANADA
Tariffs on Canadian imports into the U.S. haven’t been as harsh as initially feared, sparking some relief. Still, their impact on the Canadian economy will be closely monitored.
Trade data for March are due Tuesday, followed by jobs data for April on Friday, May 9.
LATIN AMERICA
Brazil’s central bank announces a decision on Wednesday and is widely expected to raise its key interest rate again, most likely by 50 basis points, taking it to 14.75% as it seeks to counter high inflation. This follows a 100 basis-point hike in March.
“That’s likely to mark the end of this tightening cycle and, given how restrictive policy settings currently are, there may even be a turn to rate cuts before the end of the year,” Capital Economics said in a note.
Mexican inflation data for April are due Thursday, followed by Brazilian April inflation Friday.
EUROZONE
Focus in the coming week will likely center on updates on the health of Germany’s manufacturing sector amid tariff prospects, with manufacturing orders due Wednesday and industrial production Thursday, both for March.
Industrial production figures for March from France, as well as eurozone producer price inflation data for March are released Tuesday, followed by French trade and eurozone retail sales figures Wednesday.
Final French, German and eurozone purchasing managers’ surveys for April are released Tuesday.
On Tuesday, Austria will sell 2035- and 2044-dated bonds, while Germany will offer 4.5 billion euros in April 2030 Bobls. France will hold an auction on Wednesday, and Spain will do so on Thursday.
U.K.
The Bank of England is widely expected to cut interest rates by 25 basis points in a decision Thursday, taking its key rate down to 4.25%, following recent weaker inflation data and falling energy prices.
“This month’s decision looks easy, as the implications of Trump’s policy shifts and subsequent market moves all point in a disinflationary direction and domestically, services inflation has finally surprised to the downside,” Investec economist Sandra Horsfield said in a note.
Given a rate cut is widely expected, investors will likely focus on any commentary on the trajectory of rate cuts going forward.
Most analysts for now expect the BOE to stick to its recent mantra that future rate reductions will be gradual and likely once per quarter due to the uncertainty over the impact of trade tariffs. Signs that the economy is deteriorating faster than previously expected could prompt the BOE to start reducing rates at a faster pace, however.
The final reading of the U.K. purchasing managers’ survey for services in April will be released Tuesday and RICS’s U.K. house-price survey for April is due Thursday.
The U.K. plans to sell March 2030 gilts on Wednesday.
U.K. markets will be closed for a public holiday on Monday.
SCANDINAVIA
Rate decisions from Sweden’s Riksbank and Norway’s Norges Bank are due Thursday, with both expected to keep rates on hold at 2.25% and 4.50%, respectively.
The Riksbank kept rates on hold at its last meeting after a string of rate reductions which have helped the economy to recover and things haven’t changed sufficiently since then to warrant a change of course, ING analysts said in a note.
Tariffs could hurt Sweden’s economy, however, and could justify another reduction in the coming months, they said.
Norges Bank postponed a planned rate cut in March due to high uncertainty over inflation prospects. Uncertainty has “eased somewhat” since but remains “uncomfortably high,” although the global economic outlook also remains uncertain, SEB analysts said in a note.
Norges Bank will therefore likely leave rates on hold and reiterate that the policy rate will likely be reduced over the course of 2025, they said.
Sweden will release flash inflation data for April on Wednesday. Norway April inflation figures are due Friday, May 9.
Denmark and Sweden will hold auctions on Wednesday.
SWITZERLAND
Swiss inflation data for April are released Monday.
CENTRAL AND EASTERN EUROPE
Rate decisions are due in the Czech Republic and Poland on Wednesday.
Poland’s central bank is expected to cut interest rates, either by 50 basis points or by 25 basis points from the current level of 5.75%, following a substantial decline in April inflation, moderating wage growth and softer economic data, ING analyst Adam Antoniak said in a note.
“We lean towards the former [50 basis-point cut], however, it may be accompanied by a less dovish post-meeting press release designed to help cool market expectations,” he said.
ING expects a 25 basis-point reduction in the Czech Republic’s key rate, from 3.75% currently. However, if inflation data released on Tuesday are stronger than expected then the central bank would most likely pause, ING’s Frantisek Taborsky said.
CHINA
China’s April trade data, due Friday, May 9, is the main event of the week, with markets scrutinizing the figures for signs of how U.S. tariffs are weighing on the world’s largest exporter.
“We’ll finally see how the sharp escalation of tariffs affected trade in Asia’s biggest economy,” ING economists said.
They expect the impact to be significant, forecasting double-digit on-year declines in both exports and imports. U.S.-bound shipments, which account for 14%-15% of China’s exports, may have largely stalled in April, ING said.
Citi economists are more optimistic, projecting a 2% on-year increase in exports. While sentiment indicators such as PMIs have softened, Citi noted high-frequency trackers suggest hard trade data may still hold up in April.
Also in focus is Tuesday’s Caixin services-sector PMI, expected to show further weakness following disappointing official PMI figures.
Markets will watch for policy signals from Beijing, especially after the Chinese commerce ministry indicated openness to trade talks with the U.S.
Foreign-exchange reserves data are due Thursday.
April inflation figures, scheduled for Saturday, are unlikely to show signs of improvement, given the downward pressure on China’s economy and the fragility of consumer and business sentiment.
AUSTRALIA, NEW ZEALAND
New Zealand’s first-quarter employment data will take center stage Wednesday.
The Reserve Bank of New Zealand’s earlier rate hikes have led to rising unemployment, and economists expect the jobless rate to rise in the first quarter to 5.3% from 5.1% in the final quarter of last year.
While the RBNZ has been cutting rates since mid-2024 to support growth, recovery in the labor market may take some time given slowing demand from major trading partners such as China. The central bank is likely to maintain its accommodative policy stance for now.
JAPAN
On Thursday, the Bank of Japan will release minutes of its March meeting-when it held rates steady at 0.5% amid tariff uncertainty.
Friday’s household spending data is expected to show a 0.3% on-year rise in March, following February’s 0.5% drop, according to a poll of economists by data provider Quick.
The Finance Ministry’s auction of 2.6 trillion yen in 10-year Japanese government bonds on Thursday is expected to attract solid demand, given diminished expectations of near-term BOJ rate hikes.
“We now expect the next policy rate increase in October rather than July, as persistent tariff uncertainty may weigh on growth and delay inflationary pressures,” Kenanga Investment Bank economists said.
Japanese markets are closed on Monday and Tuesday for public holidays.
MALAYSIA
Bank Negara Malaysia is expected to leave its policy rate unchanged at 3.0% on Thursday.
While growth risks from U.S. tariffs and weaker global demand have risen, Maybank’s Winson Phoon expects the central bank to hold fire for now, though a dovish tone and readiness to ease if needed are likely.
(MORE TO FOLLOW) Dow Jones Newswires
05-04-25 1714ET
