We are publishing our Week Ahead preview a little earlier than usual, in light of the Easter holiday weekend. As such, we are yet to see the US payrolls print for March, due Friday, which would ordinarily be the major data event for us to digest. But absent a significant miss relative to consensus expectations, our suspicion is that the numbers would most likely be overshadowed by Middle East developments in any case. With the conflict ranging on, Presidential commentary on the war continues to drive wild swings in energy costs, with spillovers still the primary catalyst for FX markets.

We see little reason to expect this dynamic to change over the long weekend, or indeed, throughout next week. That said, markets will receive more data on just how concerned it is rational to be. There has been plenty of debate amongst pundits regarding the likely inflation impact of the conflict, and on how central banks should respond. With that in mind, traders will be closely watching a rate decision from the RBNZ, jobs data from Canada, and perhaps most importantly, CPI readings from Sweden, Norway and the US. This latter print could, we think, help the dollar to make further gains, adding to a solid recent run, with the DXY having already risen 2% since the outbreak of fighting between the US, Israel and Iran.

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Authors:

Nick Rees, Head of Macro Research

Barry van der Laan, Senior FX Market Strategist

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