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email: sales@tradersway.com
April 2 is the main day, the so-called Liberation Day, where new and reciprocal tariffs will be applied. In addition, we will have NFP, ISM PMI, inflation data from from the Eurozone an Switzerland, PMI data from China and employment data from Canada will highlight the week ahead of us.
USD
The week started with new talks about tariff adjustments. Now instead of targeting entire industries tariffs will be targeted towards countries with significant trade surplus with the US. Exemptions for autos, pharma and chip makers are expected. On Wednesday President Trump announced 25% tariffs on all cars and light trucks made outside of the US. This tariff will also take place on April 2, “Liberation Day”, they will be added on top of other tariffs and will remain in place throughout his mandate. Mexico. Japan, Germany and Canada will be hit the hardest by these new tariffs. Trump has also announced a one month tariff exemption for auto-parts that will last until May 3.
Headline PCE for the month of February was unchanged at 2.5% y/y with a 0.3% m/m print (0.340% vs 0.325% the previous month). Core PCE ticked up to 2.8% y/y from 2.7% y/y in January with a 0.4% m/m vs 0.3% m/m as expected print (0.380% vs 0.285% the previous month). There was almost a full percentage increase in m/m core reading and with it being more than double the necessary 0.17% m/m for a 2% annualized reading it is hard to see chances for a rate cut increasing. Personal income came in at 0.8% m/m vs 0.4% m/m as expected with personal spending increasing 0.4% m/m vs 0.5% m/m as expected, both were higher than in January. Final Q4 GDP reading was revised up to 2.4% from 2.3% annualized in previous readings. Private consumption was revised down while net exports and government consumption were revised up. Atlanta Fed GDP tracker now sees Q1 GDP at -2.8%, down from -1.8% previously.
The yield on a 10y Treasury started the week at 4.26%, rose to 4.40% and finished the week at around 4.27%. The yield on 2y Treasury started the week at 3.97% and reached the high of 4.06%. Spread between 2y and 10y Treasuries started the week at 30bp and finished the week at 38bp as curve returned to bear steepening. FedWatchTool sees the probability of a 25bp rate cut at May meeting at around 10%, while probability of a no cut is around 90%. June is the first meeting that sees above 50% probability of a rate cut. Gold has settled comfortably above the $3000 level reaching a new high of $3085.
This week we will have ISM PMI data for the month of March, tariff day on April 2 and NFP data on Friday. Headline number is projected to be at 128k with the unemployment rate remaining at 4.1%.
Tuesday:
ISM Manufacturing PMI
Wednesday:
“Liberation Day”
Thursday:
ISM Services PMI
Friday:
NFP
Unemployment Rate
EUR
Preliminary March PMI data saw manufacturing PMI rise to 48.7 from 47.6 in February. Manufacturing PMI surge due to front running the threat of tariffs. It is also buoyed by the infrastructure stimulus from Germany with both France and Germany printing big jumps and getting closer to expansion territory. New orders are still contracting, but at a slower pace while export orders could remain under pressure given the trade war and weaker global demand. The report states that manufacturers expanded their output for the first time in two years. Services ticked down to 50.4 from 50.6 the previous month. Domestic demand is more important for services sector than tariff threat and if this is a sign that consumer is stumbling it could be worrisome. Composite was propelled to 50.4 by strong manufacturing readings.
Preliminary CPI data for March showed French reading unchanged at 0.8% y/y while markets were expecting a 0.9% y/y print. Spanish reading dropped to 2.3% y/y from 3% y/y in February, more than 2.4% y/y expected. ECB survey of inflation expectations showed no change in the next twelve months and three years. In combination with softer preliminary prints this will increase chances of another rate cut in April.
This week we will have preliminary inflation reading expected to tick down further and add more credence to the April rate cut talk.
Important news for EUR:
Tuesday:
CPI
GBP
The division between two sectors in the UK economy has deepened further as shown by the preliminary PMI readings for the month of March. Manufacturing PMI declined to 44.6 from 46.4 in February which is new 18-month low while services jumped to 53.2 from 50.9 the previous month, a new six-month high. Composite was lifted by services and printed 52 from 50.5 seen in February.
BoE Governor Bailey stated that raising potential growth of the economy proves to be a challenging task. He emphasized importance of AI and general-purpose tech as well as skilled labor. Additionally, signs appear that businesses delay investments to due to uncertainties surrounding global trade.
February inflation data surprised to the downside with headline number printing 2.8% y/y after a 3% y/y print seen in January. Core reading dropped to 3.5% y/y from 3.7% y/y the previous month while markets were expecting a 3.6% y/y print. Digging into the details we see that the drop was caused by drop in prices of goods while services inflation remains at a very high level of 5%. The report shows both encouraging and worrying signs and it is not sure to move BoE towards further rate cuts.
Chancellor of the Exchequer Reeves unveiled Spring statement which showed that GDP is expected to be around 1% in 2025 and average around 1.75% over the rest of the decade. The statement shows further spending as cuts to welfare budget and government spending will come in effect in four years’ time. The debt issuance for the next twelve months has not been changed and stays at £300bn.
AUDFederal budget announcement saw GDP for 2026 at 2.25% and 2.5% for 2027. Tax cuts were also announced such as the tax rate for the $18,201 to $45,000 threshold will be reduced to 15% from 16% from July 1 2026 with additional cut to 14% from July 1 2027. This is seen as a political move to gather support for the second term of current Prime Minister Albanese. February CPI reading ticked down to 2.4% y/y from 2.5% y/y as seen in January. Although monthly reading does not encompass full scope of inflation seeing it go down will be welcomed by the RBA.
This week we will have RBA meeting where no change is expected. Additionally, we will get official March PMI data from China.
Important news for AUD:
Monday:
Manufacturing PMI (China)
Services PMI (China)
Composite PMI (China)
Tuesday:
RBA Interest Rate Decision
NZD
Consumer confidence for the month of March continued to deteriorate and printed 93.2 vs 96.6 in February. Kiwi was stuck in the range for most of the week as markets were unwilling to push it either way due to quarter end rebalancing flows and incoming tariffs.
CAD
Canada started the year on a strong footing with GDP increasing 0.4% m/m vs 0.3% m/m as expected. Increases were broad based as 13 out of 20 sectors saw improvements. The increase was led by goods producing industries while services rose modestly. Advanced February reading sees GDP coming in flat. Tariff concerns are the main driver of CAD so April 2 is critical for future of the economy.
This week we will have employment data.
Important news for CAD:
Friday:
Employment Change
Unemployment Rate
JPY
Preliminary March PMI data showed all three numbers printing below 50. For services and composite this is the first drop into contraction since October. Manufacturing came in at 48.3, down from 49 in February as output and new orders showed stronger declines. Positives can be seen in growing new export orders and employment while both input and output prices declined. Services dropped to 49.5 from 53.7 the previous month and dragged composite with them to 48.5 from 52 in February. Services sector recorded outright decline in output while new orders, new export orders and employment showed weaker growth. Output prices showed weaker inflation while input prices showed stronger inflation due to rising wages. Services showed weaker positive outlook while manufacturing showed stronger positive outlook.
Minutes from the last week#s BoJ meeting showed members getting increasingly confident that underlying inflation will reach 2% target. Additionally, some members feel that even when rates get increased real rates will still stay deep in negative territory due to high inflation. There were no hints on future path of monetary policy. Yield on 10y JGB reached a new high of 1.58%.
Governor Ueda had some comments during the week that negatively impacted JPY. He stated that cost-push inflation will likely dissipate in time and that if the food price increases prove to be only temporary then BoJ should not respond using monetary policy tools. He clarified that if increase in food prices proves to be sustained and pushes up services prices as a result then it could lead to wide-range inflation which will warrant further rate hikes.
March inflation data for the Tokyo area saw all three measures come hotter than expected and all three print above BoJ’s 2% target. Headline number came in at 2.9% y/y vs 2.8% y/y the previous month while markets were expecting a slowdown to 2.7% y/y. Ex fresh food component printed 2.4% y/y vs 2.2% y/y as expected and in February while ex fresh food, energy component printed 2.2% y/y vs 2% y/y as expected and up from 1.9% y/y the previous month. Governor Ueda is unwilling to commit to rate hikes until he has more information about tariff developments but this hot inflation print increases chances of a May hike.
CHF
SNB total sight deposits for the week ending March 21 came in at CHF440.4bn vs CHF440.7bn the previous week. Virtually no change as SNB lets market dictate Swissy’ strength.
This week we will have inflation data.
Important news for CHF:
Thursday:
CPI
