Dollar in focus as the market awaits the NFP and two central bank decisions

Nikkei 225

Japan's Nikkei 225 crossed the 40,000 mark this morning, setting a new record high, lifted by technology stocks.

The National People's Congress

In China, the National People's Congress will begin on Tuesday, where Chinese Premier Li Qiang will lay out economic targets for this year. Pressure is mounting on China leaders as the country is facing a property crisis, deepening deflation, and a stock market rout. Like last year, Li Qiang is expected to set a growth target of around 5% for 2024 to keep China on a path towards President Xi Jinping's goal of roughly doubling the economy by 2035. Last year's 5.2% growth rate was likely much flattered by a comparison with a COVID-hit 2022. There won't be such a base effect in 2024, and the 5% target will be a lot more difficult to achieve.

The Bank of Canada

This week, investors will be watching the Bank of Canada's interest rate decision on Wednesday and the ECB's on Thursday. Last week, ECB President Lagarde suggested that disinflation would persist and emphasised the need for more evidence before price increases can return to the 2% European Central Bank (ECB) inflation target rate. The bank is expected to keep its main refinancing rate unchanged at 4.5%. Canada, meanwhile, is widely expected to keep its rate unchanged at 5% this week. It comes after inflation, which fell 2.9% in January. The BOC has paused raising rates at its last four meetings.

Theb US dollar

The USD could be tested later this week with the release of a set of job-related data in the US. First on Wednesday, with the ADP employment change. US private businesses are forecast to have hired 150,000 workers in February, after 107,000 job creations in January. Also on Wednesday, job openings and labor turnover survey (JOLTs) job openings. The number of job openings is thought to have dropped to 8.895 million in January, 131,000 fewer than in December. And on Friday, non-farm payrolls. Early expectations are for 200,000 job creations. Remember last month the US economy added 353,000 jobs in January after an upwardly revised 333,000 in December, way above market forecasts of 180,000.

Crude oil

Organization of the Petroleum Exporting Countries (OPEC+) members agreed on Sunday to extend voluntary oil output cuts of 2.2 million barrels per day into the second quarter. Saudi Arabia said it would extend its voluntary cut of 1 million bpd, leaving its output at around 9 million bpd. Last week, two OPEC+ sources told Reuters that these cuts could be extended until the end of the year. But would that be enough to support prices? The IEA expects oil supply to grow to a record high of about 103.8 million bpd this year, almost entirely driven by producers outside OPEC+. Last Friday, the Baker Hughes weekly survey showed an increase in total rig count to 629 last week, up from 626 the previous one. The number of oil rigs in operation rose by 3 to 506, the most since September last year.