IC Markets Europe Fundamental Forecast | 17 April 2025

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April 17, 2025 14:00

IC Markets Europe Fundamental Forecast | 17 April 2025

What happened in the Asia session?

Following a surprise decline of 52.8k jobs in February, missing market estimates of a 30k gain and marking the first drop since March 2024, employment change in Australia gained 32.2k jobs, missing market forecasts of a 39.8k increase. Although the unemployment rate edged higher to 4.1%, undershooting the estimate of 4.2%, the previous month’s reading was revised lower from 4.1% down to 4.0%. Despite an improvement in the labour market for March, demand for the Aussie dampened as this currency pair slid toward 0.6350 by midday in Asia.

What does it mean for the Europe & US sessions?

The ECB looks all set to move ahead with its sixth successive rate cut at today’s meeting, with an expected reduction of 25 basis points (bps). With inflation moderating lower and the sluggish Euro Area economy projected to face further headwinds due to the ongoing global trade policy uncertainties, this central bank will hope that another reduction in the three key ECB interest rates will aid in reviving the economy. The Euro briefly surged past 1.1400 overnight before sliding toward 1.1350 at the beginning of Thursday’s Asia session.

The Dollar Index (DXY)

Key news events today

Unemployment Claims (12:30 pm GMT)

What can we expect from DXY today?

Unemployment claims have been relatively stable over the past six weeks, with the 12-week average standing at 223k. The latest forecast points to a slight increase in claims, rising from 223k to 225k. Should claims come in ‘soft’ once more, it could provide a much-needed near-term boost for the dollar later today.

Central Bank Notes:

The Board of Governors of the Federal Reserve System voted unanimously to maintain the Federal Funds Rate in a target range of 4.25 to 4.50% on 19 March 2025
The Committee seeks to achieve maximum employment and inflation at the rate of 2% over the longer run but uncertainty around the economic outlook has increased; the Committee is attentive to the risks to both sides of its dual mandate.
Recent indicators suggest that economic activity has continued to expand at a solid pace while the unemployment rate has stabilized at a low level in recent months, and labour market conditions remain solid. However, inflation remains somewhat elevated.
GDP growth forecasts were revised downward for 2025 (1.7% vs. 2.1% in the December projection) while PCE inflation projections have been adjusted slightly higher for 2025, with core inflation expected to reach 2.5%, partly due to tariff-related pressures.
In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook and is prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of its goals.
Beginning in April, the Committee will slow the pace of decline of its securities holdings by reducing the monthly redemption cap on Treasury securities from $25B to $5B while maintaining the monthly redemption cap on agency debt and agency mortgage-backed securities at $35B.
The next meeting is scheduled for 6 to 7 May 2025.

Next 24 Hours Bias

Weak Bullish

Gold (XAU)

Key news events today

Unemployment Claims (12:30 pm GMT)

What can we expect from Gold today?

Next 24 Hours Bias

Weak Bearish

The Australian Dollar (AUD)

Key news events today

Labour Force Report (1:30 am GMT)

What can we expect from AUD today?

Central Bank Notes:

The RBA maintained the cash rate at 4.10% on 1 April, following a 25-basis point reduction on 18 February.
Inflation has fallen substantially since the peak in 2022, as higher interest rates have been working to bring aggregate demand and supply closer towards balance.
Recent information suggests that underlying inflation continues to ease in line with the most recent forecasts published in the February Statement on Monetary Policy.
Private domestic demand appears to be recovering, real household incomes have picked up and there has been an easing in some measures of financial stress. However, businesses in some sectors continue to report that weakness in demand makes it difficult to pass on cost increases to final prices.
At the same time, a range of indicators suggest that labour market conditions remain tight. Despite a decline in employment in February, measures of labour underutilisation are at relatively low rates and business surveys and liaison suggest that availability of labour is still a constraint for a range of employers. Wage pressures have eased a little more than expected but productivity growth has not picked up and growth in unit labour costs remains high.
There are notable uncertainties about the outlook for domestic economic activity and inflation. The central projection is for growth in household consumption to continue to increase as income growth rises. But there is a risk that any pick-up in consumption is slower than expected, resulting in continued subdued output growth and a sharper deterioration in the labour market than currently expected.
Uncertainty about the outlook abroad also remains significant. On the macroeconomic policy front, recent announcements from the U.S. on tariffs are having an impact on confidence globally and this would likely be amplified if the scope of tariffs widens, or other countries take retaliatory measures. Geopolitical uncertainties are also pronounced.
The Board’s assessment is that monetary policy remains restrictive and the continued decline in underlying inflation is welcome, but there are nevertheless risks on both sides and the Board is cautious about the outlook.
The Board will rely upon the data and the evolving assessment of risks to guide its decisions and is resolute in its determination to sustainably return inflation to target and will do what is necessary to achieve that outcome.
The next meeting is on 20 May 2025.

Next 24 Hours Bias

Weak Bearish

The Kiwi Dollar (NZD)

Key news events today

CPI (10:45 pm GMT 16th April)

What can we expect from NZD today?

After moderating lower from an annual rate of 0.6% in the previous period to 0.5% in the final quarter of 2024, consumer inflation in New Zealand accelerated in the first quarter of 2025, surging to 0.9%. Not only did the latest result exceed market forecasts of a 0.7% rise, but it also marked the highest reading since September 2023. The largest contributors to the quarterly rise were petrol prices, which climbed 4.6%, accounting for 17% of the overall 0.9% increase, and prices for tertiary and other post-school education, surging to 22.6%, contributing 11% to the total CPI rise. This jump follows the end of the first-year Fees Free program at the close of 2024, which was replaced by a final-year Fees Free scheme beginning on 1 January 2025. Students who previously claimed the first-year Fees Free benefit are not eligible for the final-year scheme, resulting in more students bearing the full cost of study in 2025.

Central Bank Notes:

The Monetary Policy Committee (MPC) agreed to reduce the Official Cash Rate (OCR) by 25 basis points bringing it down to 3.50% on 9 April, marking the fifth consecutive rate cut.
The Committee assessed that annual consumer price inflation remains near the midpoint of the MPC’s 1 to 3% target band while firms’ inflation expectations and core inflation are consistent with inflation remaining at target over the medium term.
Economic activity has evolved largely as expected since the February Monetary Policy Statement; higher-than-expected export prices and a lower exchange rate have supported primary sector incomes and overall economic growth.
Although monetary restraint had been removed at pace, household spending and residential investment have remained weak.
The recently announced increases in global trade barriers weaken the outlook for global economic activity. On balance, these developments create downside risks to the outlook for economic activity and inflation.
The Committee noted that the increase in tariffs will take time to work through the global economy, but the direct price increases for economies imposing tariffs and the dampening impact of increased economic uncertainty on global demand will occur relatively quickly.
With CPI inflation close to the mid-point of the target range, significant spare capacity in the economy, and a weaker activity outlook stemming from global trade policy, the Committee agreed that a further reduction in the OCR was appropriate.
Meanwhile, future policy decisions will be determined by the outlook for inflationary pressure over the medium term.
The next meeting is on 28 May 2025.

Next 24 Hours Bias

Weak Bearish

The Japanese Yen (JPY)

Key news events today

Trade Balance (11:50 pm GMT 16th April)

What can we expect from JPY today?

Following a shift to a surplus of ¥590.5B in February, Japan’s trade balance registered a second consecutive month of surplus with a figure of ¥544.1B in March, exceeding market expectations of ¥485.3B. Exports rose 3.9% YoY to a three-month high of ¥ 9.85T, marking the sixth consecutive month of expansion while imports rose to ¥9.31T. Demand for the yen eased overnight as USD/JPY reversed off 141.60 to climb above 142.50 as Asian markets came online.

Central Bank Notes:

The Policy Board of the Bank of Japan decided on 19 March, by a unanimous vote, to maintain the following guidelines for money market operations for the inter-meeting period:
1. The Bank will encourage the uncollateralized overnight call rate to remain at around 0.5%.
2. The Bank will continue its plan to reduce the amount of its monthly outright purchases of JGBs, aiming to reach about 3 trillion yen by January-March 2026.
Japan’s economy has continued to recover moderately, with some sectors showing improvement. Exports and industrial production have remained relatively stable, while corporate profits continue on an improving trend and business sentiment maintains a favourable level.
The employment and income situation has shown moderate improvement, with private consumption on a moderately increasing trend despite ongoing impacts from price rises.
On the price front, the year-on-year rate of increase in the consumer price index (CPI, all items less fresh food) has been in the range of 3.0-3.5% recently. Services prices continue to rise moderately, reflecting factors such as wage increases, while the effects of cost pass-through from past import price rises have diminished.
Inflation expectations have continued to rise moderately, with underlying CPI inflation gradually increasing toward the price stability target of 2%. The virtuous cycle between wages and prices continues to strengthen, with businesses increasingly reflecting higher costs in selling prices.
Japan’s economy is expected to maintain growth above its potential rate, supported by moderately growing overseas economies and the intensifying virtuous cycle from income to spending, underpinned by accommodative financial conditions.
The next meeting is scheduled for 19 June 2025.

Next 24 Hours Bias

Weak Bullish

The Euro (EUR)

Key news events today

ECB Interest Rate Decision (12:15 pm GMT)

ECB Press Conference (12:45 pm GMT)

What can we expect from EUR today?

Central Bank Notes:

The Governing Council reduced the three key ECB interest rates by 25 basis points on 6 March to mark the fifth successive rate cut.
Accordingly, the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will be decreased to 2.65%, 2.90% and 2.50% respectively.
The Council acknowledged that monetary policy was becoming meaningfully less restrictive, easing borrowing costs for businesses and households with inflation projected to average 2.3% in 2025, 1.9% in 2026, and 2.0% in 2027, while core inflation also neared the 2% target.
Although domestic inflation remains elevated due to delayed wage and price adjustments, wage growth is moderating.
Economic growth forecasts were revised downward to 0.9% for 2025 and 1.2% for 2026, reflecting weak exports and investment.
The asset purchase programme (APP) and pandemic emergency purchase programme (PEPP) portfolios are declining at a measured and predictable pace, as the Eurosystem no longer reinvests the principal payments from maturing securities.
The ECB remains data-dependent and will adjust its policy as needed to ensure inflation stabilizes around its 2% medium-term target without committing to a specific rate path.
The next meeting is on 17 April 2025.

Next 24 Hours Bias

Weak Bearish

The Swiss Franc (CHF)

Key news events today

No major news events.

What can we expect from CHF today?

Demand for safe-haven assets such as the Swiss franc picked up on Wednesday as USD/CHF fell 1.4%. This currency pair hit an overnight low of 0.8115 before climbing above 0.8150 as Asian markets came online.

Central Bank Notes:

The SNB eased monetary policy by lowering its key policy rate by 25 basis points, from 0.50% to 0.25% on 20 March 2025, marking the fifth consecutive reduction.
Underlying inflationary pressure has decreased further this quarter.
Inflation in the period since the last monetary policy assessment has again been lower than expected, decreasing from 0.7% in November to 0.3% in February, primarily due to lower electricity prices.
In the shorter term, the new conditional inflation forecast is slightly higher than December: 0.3% for Q2 2025, 0.4% for 2025 overall, and 0.8% for 2026 and 2027, based on the assumption that the SNB policy rate remains at 0.25% over the entire forecast horizon.
GDP growth in Switzerland remains moderate, with the services sector continuing to show slightly stronger growth, while manufacturing faces challenges.
The SNB anticipates GDP growth of around 1.0% to 1.5% for 2025.
The SNB will continue to monitor the situation closely and will adjust its monetary policy if necessary to ensure inflation remains within the range consistent with price stability over the medium term.
The next meeting is on 19 June 2025.

Next 24 Hours Bias

Weak Bullish

The Pound (GBP)

Key news events today

No major news events.

What can we expect from GBP today?

Consumer inflation in the U.K. eased for the second consecutive month as seen in Wednesday’s report. Headline CPI fell from an annual rate of 2.8% in the previous month to 2.6%, below market forecasts of 2.7%, while the core reading edged lower from 3.5% to 3.4% in March. The largest downward contributions came from categories such as recreation and culture, data processing equipment, and transport. Despite inflation cooling once more, the pound continued to see strong bids as Cable

came within a whisker of breaking above 1.3300 on Wednesday. However, this currency pair pulled back overnight before tumbling toward 1.3200 at the beginning of Thursday’s Asia session.

Central Bank Notes:

The Bank of England’s Monetary Policy Committee (MPC) voted by a majority of 8 to 1 to maintain the Bank Rate at 4.50% on 19 March 2025, while one member preferred to reduce it by 25 basis points (bps).
The MPC also voted unanimously to reduce the stock of UK government bond purchases held for monetary policy purposes and financed by the issuance of central bank reserves, by £100B over the next 12 months to a total of £558B, starting in October 2024. On 18 December 2024, the stock of UK government bonds held for monetary policy purposes was £655B.
Twelve-month CPI inflation increased to 3.0% in January from 2.5% in December, slightly higher than expected in the February Report; domestic price and wage pressures are moderating, but remain somewhat elevated.
Although global energy prices have fallen back recently, they remain higher than last year and CPI inflation is still projected to rise to around 3.75% in 2025 Q3. While CPI inflation is expected to fall back thereafter, the Committee will pay close attention to any consequent signs of more lasting inflationary pressures.
While UK GDP growth estimates have been slightly stronger than expected at the time of the February Monetary Policy Report, business survey indicators generally continue to suggest weakness in growth and particularly in employment intentions. In recent quarters, subdued activity has been judged to reflect both demand and supply factors.
The labour market had continued to ease, although it was still judged to be broadly in balance – some indicators of employment intentions had deteriorated markedly, to levels consistent with shrinking employment while other indicators, such as the number of vacancies, had not weakened to the same extent.
Domestic price and wage pressures were moderating, but remained somewhat elevated. A range of indicators suggested that underlying pay growth had eased further in recent months, although annual growth in private sector regular average weekly earnings had picked up to 6.1% in the three months to January.
Based on the Committee’s evolving view of the medium-term outlook for inflation, a gradual and careful approach to the further withdrawal of monetary policy restraint is appropriate and it will continue to monitor closely the risks of inflation persistence and what the evolving evidence may reveal about the balance between aggregate supply and demand in the economy.
Monetary policy will need to continue to remain restrictive for sufficiently long until the risks to inflation returning sustainably to the 2% target in the medium term have dissipated further and the Committee will decide the appropriate degree of monetary policy restrictiveness at each meeting.
The next meeting is on 8 May 2025.

Next 24 Hours Bias

Weak Bearish

The Canadian Dollar (CAD)

Key news events today

No major news events.

What can we expect from CAD today?

As widely anticipated, the Bank of Canada (BoC) maintained its overnight rate at 2.75% on Wednesday to mark the first pause in eight meetings, where a total of 225 basis points (bps) had been cut since last June. The Governing Council noted that the unpredictability on the magnitude of tariffs placed significant downside risks on growth and lifted inflation expectations, warranting caution regarding the continuation of further monetary easing. The higher uncertainty stemmed from an unclear tariff path by the U.S., prompting the council to present two economic scenarios in its latest Monetary Policy Report. Firstly, should the U.S. limit the scope of its tariffs on Canada, economic growth is expected to weaken temporarily while inflation should hold near the target of 2%. And in the second scenario, should the U.S. proceed with an all-out trade war against Canada and China, the council anticipates a recession this year with inflation rising to 3%. Following the hold on its overnight rate, the Loonie strengthened 0.8% as USD/CAD fell sharply toward 1.3850.

Central Bank Notes:

The Bank of Canada today maintained its target for the overnight rate at 2.75%, with the Bank Rate at 3% and the deposit rate at 2.70% – marking the first pause after seven consecutive meetings where rates were reduced.
The major shift in direction of U.S. trade policy and the unpredictability of tariffs have increased uncertainty, diminished prospects for economic growth, and raised inflation expectations.
Pervasive uncertainty makes it unusually challenging to project GDP growth and inflation in Canada and globally – the April Monetary Policy Report (MPR) presents two scenarios that explore different paths for US trade policy.
In the first scenario, uncertainty is high but tariffs are limited in scope – Canadian growth weakens temporarily and inflation remains around the 2% target. In the second scenario, a protracted trade war causes Canada’s economy to fall into recession this year and inflation rises temporarily above 3% next year.
Global economic growth was solid in late 2024 and inflation has been easing towards central bank targets. However, tariffs and uncertainty have weakened the outlook. In the U.S., the economy is showing signs of slowing amid rising policy uncertainty and rapidly deteriorating sentiment, while inflation expectations have risen. In the Euro Area, growth has been modest in early 2025, with continued weakness in the manufacturing sector. China’s economy was strong at the end of 2024 but more recent data shows it slowing modestly.
In Canada, the economy is slowing as tariff announcements and uncertainty pull down consumer and business confidence. Consumption, residential investment and business spending all look to have weakened in the first quarter. Trade tensions are also disrupting recovery in the labour market. Employment declined in March and businesses are reporting plans to slow their hiring. Wage growth continues to show signs of moderation.
The Governing Council will continue to assess the timing and strength of both the downward pressures on inflation from a weaker economy and the upward pressures on inflation from higher costs while proceeding carefully, with particular attention to the risks and uncertainties facing the Canadian economy.
Monetary policy cannot resolve trade uncertainty or offset the impacts of a trade war and the Governing Council will focus on ensuring that Canadians continue to have confidence in price stability through this period of global upheaval by supporting economic growth while ensuring that inflation remains well-controlled.
The next meeting is on 4 June 2025.

Next 24 Hours Bias

Weak Bullish

Oil

Key news events today

No major news events.

What can we expect from Oil today?

Crude oil prices rose on Wednesday on the prospect of tighter supply after the White House imposed further sanctions to curb Iranian oil trade while some OPEC producers pledged further output cuts to compensate for pumping above agreed quotas. Combined with the third consecutive week of higher build as reported by the EIA inventories, WTI oil gained 1.9% as it came within a whisker of $63 per barrel overnight. However, this benchmark briefly dipped under the $62 mark in early trading on Thursday before edging higher to float around $62.20.

Next 24 Hours Bias

Weak Bullish

The post IC Markets Europe Fundamental Forecast | 17 April 2025 first appeared on IC Markets | Official Blog.

IC Markets Europe Fundamental Forecast | 17 April 2025

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