What Matters for Global Markets in The Week Ahead -3

        Peru's once gangbusters economy is slowing but the central bank is unlikely to shift policy, either in terms of interest rates or its preferred instrument for tinkering with monetary conditions, reserve requirements. In part that's because the trade deficit is widening, which could pose inflation problems. But it's also because, compared with other countries, Peru's economy is still in pretty good shape. (MC)
        CHINA: 9:30 p.m. EDT (9:30 a.m. Friday Beijing)
        --April CPI (previous CPI +2.4% on-year, -0.5% on-month)
        --April PPI (previous PPI -2.3% on-year, -0.3% on-month)
        March's consumer inflation was weaker than expected, which was largely read as an indication of a weakened economy. But with other signs suggesting the economy may have bottomed and suggestions that domestic demand is supportive, consumer inflation could stabilize in April. Perhaps more concerning is the PPI, which has been stuck in a deflationary state for more than two years. Falling prices at the factory gate are partly due to cheaper raw material prices on global markets, but they also show the impact of disappointing demand and excess capacity in some sectors of the Chinese economy. (CN)
        KOREA: 9:00 p.m. EDT (10:00 a.m. Friday Seoul) Bank of Korea Monetary Policy Committee meeting & decision [previously no change]
        Interest rates are largely expected to be kept on hold as Asia's fourth largest economy gradually picks up speed thanks to a global recovery. The last BOK rate move was a quarter-percentage-point rate cut in May 2013 to support growth.
        Just a few weeks ago there were arguments that a weaker won would boost exports and pressure the BOK to lift interest rates in the second half of the year. Those arguments will surely have diminished with the won gaining steadily against the dollar though most of April. Also weaker-than-expected first quarter U.S. GDP numbers clouds the outlook for the U.S. economy and could prompt increased caution on monetary policy on the part of the BOK. (CN)
        AUSTRALIA: 9:30 p.m. EDT (11:30 a.m. Friday Sydney) Reserve Bank of Australia Quarterly Statement on Monetary Policy
        This statement will be closely watched as the RBA will update its outlook for GDP and CPI. Given the soft first quarter CPI data, the central bank may lower its inflation forecasts, which would firm up the view that the official cash rate will remain on hold at its record low 2.5% until 2015. That would likely soften the Aussie dollar. (CN)
        FRIDAY
        GERMANY: 2 a.m. EST (8 a.m., Berlin) March balance of trade [Expected trade surplus EUR16.9 billion vs. EUR15.7 billion surplus in February; expected current account surplus EUR16.0 billion vs. EUR13.9 billion surplus in February]
        Germany continues to run very large surpluses. With domestic demand slowly starting to recover in the rest of the euro zone, it could well be that their own surpluses are eroded by the mighty German export engine, pushing the region back towards the imbalances that caused the euro zone crisis in the first place. (AM)
        U.K.: 3:30 a.m. EST (9:30 a.m., London)
        --March industrial production [Expected unchanged on the month and up 2.6% on the year vs. up 0.9% and up 2.7% respectively in February]
        --March manufacturing output [Expected up 0.3% on the month and up 2.9% on the year vs. up 1.0% and up 3.8% respectively]
        --March global trade balance [Expected deficit GBP8.8 billion vs. GBP9.1 billion deficit in February]
        The U.K. is growing strongly. The strength is spread across services, construction and industry. So any modest slowdown in industrial production or manufacturing growth during March is unlikely to cause many worries. The Bank of England will be hoping that the boom filters through to export growth, otherwise the U.K. will be returning to pre-crisis imbalances. (AM)
        ITALY: 4 a.m. EST (10 a.m., Rome) March industrial production [Expected up 0.3% on the month and up 0.9% on the year vs. down 0.5% and up 0.4% respectively in February]
        Italy is picking up. Industrial production is leading the way, but now policy makers will be looking for some of the strength to filter through to consumer demand. (AM)
        BRAZIL: 8 a.m. EDT. (9 a.m., Sao Paulo) April consumer price index. [In March, +0.92% on-month; +6.15% on-year.]
        Perhaps Brazil's biggest problem is its stubbornly high inflation rate, which continues to hold near the top end of the central bank's target range and so prevents it from easing its double-digit interest rates. And those in turn squeeze the economy's capacity to pull itself out of a long-lasting slump. (MC)
        CANADA: 8:30 a.m. EDT. April Labor Force Survey. [In March, average hourly wages +2.2%, net jobs +42,900, jobless rate 6.9%.]
        It will be interesting to see whether the improvement in the U.S. labor market in April was replicated in Canada. Also important: how much the correction in Canada's housing market is hurting job growth. (MC)
        MEXICO: Time N/A. Banco de Mexico monetary policy meeting minutes.
        The central bank took a sanguine position toward the outlook for inflation in Mexico when it opted to keep rates steady two weeks ago. More details on that decision should come from this release. (MC)
        U.S.: Time N/A. Federal Reserve Bank of Minneapolis President Narayana Kocherlakota speech at Asian Heritage Dinner.
        Mr. Kocherlakota is a voting member of the FOMC. Notably, he dissented two meetings ago over the Fed's decision to modify its criteria for future policy changes. But he came back in line with the unanimous vote at least week's meeting. (MC)
        (END) Dow Jones Newswires

        May 05, 2014 00:00 ET (04:00 GMT)