Contact us:
phone: +1 849 9370815
email: sales@tradersway.com
Contact us:
phone: +1 849 9370815
email: sales@tradersway.com
RBNZ meeting, inflation data from the US and China as well as the FOMC meeting will highlight the week ahead of us that will be dominated by reciprocal tariff implementation on April 9 at 12:01 am.
USD
ISM manufacturing for the month of March came in at 49 vs 49.5 as expected and down from 50.3 in February. Production dropped below 50 while both new orders and employment dropped deeper into contraction. Prices paid component surged to 69.4, highest since June of 2022, as front running of tariffs led to bloating of input prices. Tariff uncertainty is hurting the sector.
February JOLTS data showed 7568k job openings vs 7762k in January. Quits rate came in at 2%. It has been steadily declining indicating that there are fewer jobs available or that they are less attractive. Declining quits rate leads to employers having less concern about keeping employees and thus it lowers their need to increase wages.
US President Trump delivered on his threats on “Liberation Day”. Countries were slapped with massive tariffs with imports from China being hit by 34% tariff on top of 20% for a total of 54%! Switzerland was hit with 31%, Japan with 24%, EU with 20%, United Kingdom and Australia with 10%. Tariffs are much bigger than markets expected and they could have devastating effect on the world trade, potentially plunging world into a recession. Goods that comply with USMCA continue to be exempt from tariffs so now new tariffs on Mexico and Canada. They are still tariffed for fentanyl and migration issues. The baseline tariffs of 10% will be imposed on April 5 at 12:01am. Reciprocal tariffs will be imposed on April 9 at 12:01am. This all leaves plenty room for further renegotiations of tariffs. China has announced on Friday that it will put a 34% tariff on all US goods as a retaliation. China tariffs will take place on April 10.
March ISM services PMI printed 50.8 vs 53 as expected, a drop from 53.5 in February. Business activity increased while prices paid component decreased. On the other hand, new orders barely managed to stay in expansion with a 50.4 print while new export orders plunged into contraction territory. The biggest drop was seen in employment index which plunged to 46.2 from 53.9 the previous month. Tariff effects are the main concern for employers and majority of them is not looking to add more stuff until they get more clarify on the economic outlook.
Employment report for the month of March saw economy add 228k jobs vs 135k jobs as expected. The unemployment rate ticked up to 4.2% but it was followed by an uptick in participation rate (62.5% vs 62.4% in February). U6 underemployment rate ticked down to 7.9% but it is still very elevated. Wages rose 0.3% m/m, after a 0.2% m/m increase in February, but yearly figure slowed down to 3.8% increase from 4% increase the previous month. Healthcare added 54k jobs, leisure and hospitality added 43k jobs while government added 19k jobs. Next month’s employment report should show us first effects of DOGE cuts as well as cuts connected to the newly implemented tariffs.
The yield on a 10y Treasury started the week at 4.24%, rose to 4.24%, dropped below 4% after tariff announcement and finished the week at around 4%. The yield on 2y Treasury started the week at 3.92% and reached the high of 4.06% and then finished the week below 4%. Spread between 2y and 10y Treasuries started the week at 33bp and finished the week at 33bp as curve stayed unchanged. FedWatchTool sees the probability of a 25bp rate cut at May meeting surging to around 30%, while probability of a no cut is around 70%. Gold had a violent week as gold fell to around $3050 on deleveraging. WTI crude has fallen bellow $61, a two-year low and finished the week at around $62.
This week we will have FOMC minutes and reciprocal tariff implementation as well as March inflation figures.
Important news for USD:
Wednesday:
FOMC Minutes
Reciprocal Tariffs
Thursday:
CPI
EUR
Preliminary March inflation for the Eurozone printed 2.2% y/y as as expected, a tick down from 2.3% y/y seen the previous month. Services inflation also came down and printed 3.4% y/y. German reading printed matched the Eurozone reading while data from Italy showed a jump to 2% y/y from 1.6% y/y in February. Core CPI also came down printing 2.4% y/y down from 2.6% y/y the previous month and lower than 2.5% y/y as expected. Good news for the ECB.
GBP
Final manufacturing PMI for the month of March was revised up to 44.9 from 44.6 as preliminary reported. Still, the reading represents a 17-month low with lowest business optimism since November of 2022. Output, new orders and new export orders all recorded steeper drops. The report shows that companies are facing deteriorating market conditions and rising costs due to increases in national minimum wage. Services printed 52.5, lower than 53.2 as preliminary reported, but still an improvement from 51 seen in February. Composite was lifted to 51.5 from 50.5 the previous month.
AUD
RBA has left cash rate unchanged at 4.10% as was widely expected. Accompanying statement shows that underlying inflation is moderating while level of uncertainty is increasing. Members still see monetary policy as restrictive and warn that risks to inflation are on the both sides. The bank remains data-dependent.
Governor Bullock reiterated that bank’s main goal is to return inflation back to their 2-3% target which necessitates restrictive monetary policy. She added that there was no explicit talk of rate cuts at the meeting and that the decision to keep rates unchanged was made by consensus. Tariff threats are creating uncertainties. Inflation along with labor data and tariff impact will be closely monitored when deciding on future rate moves. At the moment, the bank is in “wait and see” mode.
Official PMI data for the month of March from China saw manufacturing rise to 50.5, highest since the March of 2024. Production and new orders index both moved further into expansion while new export orders inched closer to returning into expansion by posting a highest print in almost a year. Prices paid continues to decline confirming overwhelming deflationary pressures in the economy. Services PMI rose to 50.8 from 50.4 which helped push composite to 51.4 from 51.1 in February. Caixin manufacturing printed 51.2, up from 50.8 thus making it six consecutive months in expansion. The report shows similar results as official reading, increases in output and new orders, slight improvement in employment and weak pricing environment.
This week we will get inflation data from China.
Important news for AUD:
Thursday:
CPI (China)
NZD
Business confidence ticked down in March to 57.5 from 58.4 in February. Biggest increases were seen in residential construction, profit expectations and ease of credit categories. Cost expectations and price intentions increased as well warning about persistent inflation pressures as indicated by rising inflation expectations. Declines were seen in export, investment and employment intentions.
This week we will have RBNZ meeting. Rate cut has been telegraphed in advance but now since NZD has been hit pretty hard after tariff announcement we will see what changes to the economic outlook will bank members make.
Important news for NZD:
Wednesday:
RBNZ Interest Rate Decision
CAD
March employment report saw economy lose 32.6k jobs vs adding 10k jobs as was expected. The details point to even more worrying picture. The unemployment rate ticked up to 6.7% but unlike in the US, this increase was followed by a tick down in participation rate to 65.2% from 65.3% in February. Composition of jobs showed that economy lost 62k full-time jobs while it added 29.5k part-time jobs. Wage growth has slowed down to 3.6% y/y from 3.8% y/y the previous month. Canada has managed to avoid reciprocal tariffs and goods that comply with USMCA agreement are exempted from tariffs but the cracks in labor market are mounting.
JPY
February retail sales showed increase of 0.5% m/m and 1.4% y/y while industrial production, for the same month, showed a strong 2.5% m/m increase. The unemployment rate ticked down to 2.4%. BoJ has decided to lower purchases of JGB in the 10-25y tenor. Reduction in demand from BoJ will lead to higher yields on those bonds which in turn will be supportive of JPY. Liberation Day caused a stir in the markets and a massive risk off sentiment and JPY was the biggest beneficiary with USDJPY rising to the highest level in past three weeks.
CHF
SNB total sight deposits for the week ending March 28 came in at CHF451.2bn vs CHF449.2bn the previous week. Deposits have been steadily increasing for four consecutive weeks and are moving towards the upper bound of a range. March CPI saw no changes with headline number printing 0.3% y/y while core printed 0.9% y/y. Swissy was the biggest beneficiary of Trump tariffs, although Switzerland was slapped with 31% in reciprocal tariffs.
