Articles

UPCOMING
EVENTS:

• Monday: German CPI.
• Tuesday: Japan Unemployment Rate, Japan Tankan Index,
  China Caixin Manufacturing PMI, RBA Policy Decision, Swiss Manufacturing
  PMI, Eurozone CPI, Canada Manufacturing PMI, US ISM Manufacturing PMI, US
  Job Openings.
• Wednesday: US ADP, US Tariffs implementation
• Thursday: China Caixin Services PMI, ECB Meeting Minutes,
  Swiss CPI, Eurozone PPI, US Challenger Job Cuts, US Jobless Claims, Canada
  Services PMI, US ISM Services PMI.
• Friday: Swiss Unemployment Rate, Canada Employment
  Report, US NFP, Fed Chair Powell speech.

Tuesday

The RBA is
expected to keep the Cash Rate unchanged at 4.10%. As a reminder, the central
bank cut interest rates by 25 bps at the last meeting but delivered a more
hawkish than expected guidance. Since then, the monthly CPI data showed further improvement and the employment report disappointed. We’ve also got the Australian
government announcing unexpected tax cuts which could hinder RBA’s progress.

The Eurozone CPI
Y/Y is expected at 2.3% vs. 2.3% prior, while the Core CPI Y/Y is seen at 2.5%
vs. 2.6% prior. We’ve got soft French and Spanish inflation figures last Friday which saw the market increasing the bets
for another 25 bps rate cut at the April’s meeting to 90%+ probability with a
total of 70 bps of easing priced by year-end.

The US ISM
Manufacturing PMI is expected at 49.5 vs. 50.3 prior. The S&P Global survey
showed the Manufacturing sector falling back into contraction. The agency noted
that “business confidence in the outlook darkened, souring further from the
buoyant mood seen at the start of the year to one of the gloomiest readings
seen over the past three years, largely caused by growing worries over negative
impacts from recent policy initiatives from the new administration”. The most
widely cited were concerns about the impact of Federal spending cuts and
tariffs.

The US Job
Openings is expected at 7.632M vs. 7.740M prior. The last report showed an
increase in job openings with a decline in the layoffs rate and a steady hires
rate. It’s a labour market were it’s hard to find a job but there’s also low
risk of losing one. Nonetheless, that was January data so it didn’t incorporate
the recent developments in the Trump’s policies.

Wednesday

The US ADP is
expected at 105K vs. 77K prior. The last report was softer than expected with
the agency noting that “policy uncertainty and a slowdown in consumer spending
might have led to layoffs or a slowdown in hiring”. Their data, combined with
other recent indicators, suggests a hiring hesitancy among employers as they
assess the economic climate ahead.

On Wednesday the
US will unveil the reciprocal tariffs plan. There’s been lots of noise around
this event with discordant reports. Nobody defined the
general expectations though. Adam did the work though and came up with a
comprehensive analysis here.
The consensus seems to be 9-10% reciprocal tariff rate and 50% on China. This
is going to be the main event of the week and we will likely see huge moves
following the release.

Thursday

The Switzerland
CPI Y/Y is expected at 0.5% vs. 0.3% prior, while the M/M figure is seen at
0.0% vs. 0.6% prior. As a reminder, the SNB cut interest rates by 25 bps at the last meeting revising inflation
expectations downward for this year but bumping up those for 2026. The market
thinks the central bank is done with its easing cycle with just 7 bps of easing
priced in by year-end.

The US Jobless
Claims continue to be one of the most important releases to follow every week
as it’s a timelier indicator on the state of the labour market.

Initial Claims
remain inside the 200K-260K range created since 2022, while Continuing
Claims continue to hover around cycle highs.

This week Initial
Claims are expected at 225K vs. 224K prior, while Continuing Claims are seen at
1862K vs. 1856K prior.

The US ISM
Services PMI is expected at 53.0 vs. 53.5 prior. The S&P Global survey saw
the Services sector rebounding strongly in March to 54.3 vs. 50.8 prior. The
agency noted though that “some of the March upturn was reportedly due to
business picking up after adverse weather conditions had dampened activity
across many states in January and February, which could prove a temporary
bounce.” The focus will likely be on the employment and price components.

Friday

The Canadian
Employment report is expected to show 12K jobs added in March vs. 1.1K in
February and the Unemployment Rate to tick higher to 6.7% vs. 6.6% prior.
Overall, I don’t think the data will matter much this week as everything will
hinge on the US tariffs announcement. In fact, I can see a bad report getting
faded if the tariffs news will be positive and vice versa in case the tariffs
release disappoints.

The US NFP is
expected to show 140K jobs added in March vs. 151K in February and the
Unemployment Rate to remain unchanged at 4.1%. The Average Hourly Earnings Y/Y
is expected at 3.9% vs. 4.0% prior, while the M/M measure is seen at 0.3% vs.
0.3% prior. The Average Weekly Hours are seen at 34.2 vs. 34.1 prior.

The Fed is seeing
the labour market remaining solid and not being a source of inflationary
pressures. That seems to still be the case with jobless claims not showing any
worrying signs.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

• Eurostoxx -1.1%
• Germany DAX -1.0%
• France CAC 40 -1.1%
• UK FTSE -1.0%
• Spain IBEX -0.8%
• Italy FTSE MIB -1.4%

This comes as US futures are also under heavy pressure, with S&P 500 futures down 0.8% currently. The prospect of Trump tariffs ahead of Liberation Day on 2 April is still the main source of worries in broader markets at the moment. And he will certainly be banging on the war drums over the next two days in the run up. So, expect more volatility to come until then.

This article was written by Justin Low at www.forexlive.com.

Fundamental
Overview

Gold has been on a steady
uptrend lately as traders have been finding shelter in the precious metal amid
stagflationary risks. In fact, we are seeing inflation expectations rising
while growth forecasts get revised lower.

Last Friday, we got some
more bad news as the final University of Michigan survey showed consumer
sentiment slumping even more than preliminary report and long-term inflation
expectations got revised higher.

The spike overnight came
after the WSJ report saying that Trump is weighing
broader and higher tariffs with hikes potentially going up to 20%.

In the bigger picture, as
long as the Fed doesn’t change its reaction function and doesn’t consider rate
hikes, the trend should remain to the upside as real yields will continue to
fall amid the stagflationary pricing.

Gold
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that gold rallied into yet another all-time high as traders continue to
flock into the precious metal. From a risk management perspective, the buyers
will have a better risk to reward setup around the major trendline to position for further upside. The
sellers, on the other hand, will want to see the price breaking below the
trendline to start targeting a deeper correction into the 2832 level.

Gold Technical Analysis
– 4 hour Timeframe

On the 4 hour chart, we can
see that we have a minor upward trendline defining the bullish momentum. If we
were to get a pullback into the trendline, we can expect the buyers to lean on
it with a defined risk below it to position for a rally into new highs. The
sellers, on the other hand, will want to see the price breaking lower to pile
in for a drop into the next major trendline.

Gold Technical Analysis
– 1 hour Timeframe

On the 1 hour chart, we can
see that we have yet another minor upward trendline. As the fundamentals
continue to favour the upside, the buyers will look for every dip-buying
opportunity to position for further upside. Right now, the price is struggling
to extend into new highs as we reached the upper bound of the average daily range for today.

If we get a pullback into
the trendline, we can expect the buyers to step in to position for new highs,
while the sellers will look for a break lower to extend the pullback into the
next trendline.

Upcoming
Catalysts

Tomorrow we get the US Job Openings and the
US ISM Manufacturing PMI. On Wednesday, we have the US ADP and the unveiling of
the US reciprocal tariffs plan. On Thursday, we get the US ISM Services PMI and
the latest US Jobless Claims figures. On Friday, we conclude the week with the
US NFP report and Fed Chair Powell speech

This article was written by Giuseppe Dellamotta at www.forexlive.com.

They’re now expecting another 25 bps rate cut before the summer break kicks in, following the latest developments. Last week, we did get softer inflation readings from France and Spain. That’s helping with the narrative alongside likely a softer growth outlook amid Trump’s tariffs coming up later this week.

Goldman also revised their forecast for the Fed earlier here.

This article was written by Justin Low at www.forexlive.com.

That sees USD/JPY undo its advance from last week as it now falls to below 149.00, down 0.7% on the day. This comes as bonds are keeping bid amid the more defensive risk mood in markets. 10-year Treasury yields are down nearly 7 bps to 4.184%. That is nearly its lowest levels in three weeks.

It’s all about Trump tariffs and for now, markets are cowering in fear ahead of Liberation Day on 2 April.

While there was some hope last week that Trump may look towards a more targeted approach on tariffs, that has been dashed in the new week now following this report here. This is igniting recession fears and further uncertainty on the global economy.

So far, other major currencies are not showing all too much change. The dollar is keeping steadier across the board but it is the Japanese yen that is holding more of a bid today, owing to the fall in bond yields.

This article was written by Justin Low at www.forexlive.com.

As we get into the new day, broader markets are fearing that Trump might not be taking a targeted approach on tariffs come 2 April. That follows from this latest report here. Liberation Day is set to be the most important event in markets this week as we will get an idea of what sort of trade policies and tariffs that Trump wants to dish out.

That being said, it’s not going to be the only thing that could move markets this week. Let’s take a step back and weigh the other things in play in the next few days.

The first one is obviously the US jobs report on Friday. The non-farm payrolls report is going to be a notable one, with estimates showing an expected slowdown in employment growth to 128k in March – down from 151k in February.

But as was the case last month, the big thing to watch is how much impact from DOGE-related layoffs will show up in the data. That’s still an interesting quandary that could sway broader markets depending on what we see from the numbers at the end of this week.

Besides that, we also will have Eurozone inflation numbers tomorrow. And teeing that up will be the German inflation numbers today. The market pricing has grown increasingly convinced that the ECB will cut rates in April. That is of course largely thanks to Trump’s tariffs, with the latest one on German autos especially being a standout.

So, the inflation figures tomorrow could seal the deal on a rate cut. But the medium-term outlook for the ECB is definitely going to be more complicated in the months ahead. Germany’s spending package has the potential to stir up inflation and that’s something the central bank has to watch out for going into next year.

For now, the immediate focus will be quite straightforward. However, it doesn’t mean that the ECB will have an easy path following the likely rate cut in April.

Sticking with central banks, there’s also the RBA monetary policy decision tomorrow to work through. Traders are not expecting a rate cut just yet but this latest shocker in terms of labour market data has definitely raised the odds of a less hawkish tone by the central bank.

The RBA delivered a hawkish cut in February here but it looks like they might have to change their tone now before moving into May.

This article was written by Justin Low at www.forexlive.com.

As the focus turns towards Trump tariffs later in the week, the gold train is not stopping to kick start proceedings. The precious metal broke the $3,100 level earlier and is now up over 1% to a fresh record high of $3,121.

In a time like this, it’s hard to find reasons not to like gold. The amount of economic and political uncertainty, coupled with major central banks poised to cut rates further, and also central banks propping up demand as they are also buying up the precious metal. The fundamentals are all still very much supportive.

The question now for gold is the same as what broader markets are going to be dealing all through the week. Are Trump’s tariffs going to be significant come what may and are they going to be a cause for a recession and a major global slowdown?

If the answer is yes, expect gold to keep ripping higher as emotions start running in response to the tariffs on 2 April. If not, there’s likely scope for a strong pullback considering the run higher we’re seeing since the end of last week.

This article was written by Justin Low at www.forexlive.com.

• Prior +0.2%; revised to +0.7%

That’s a strong beat on estimates with an upwards revision to January to boot. It points to a good start to the new year for German retail spending, after a more disappointing holiday period at the end of last year. Looking at the breakdown, food store sales were seen up 0.8% on the month while non-food retail sales were seen up 0.6% on the month. This is most certainly a welcome development for the German economy to kick start the 2025 year.

This article was written by Justin Low at www.forexlive.com.

• Prior +1.1%

In annual terms, import prices were seen up 3.6% in February and that’s the highest year-on-year increase since January 2023. Looking at the monthly breakdown, there were increases in prices for consumer goods (+0.3%) and intermediate goods (+0.5%). The prices for capital goods were unchanged compared to January. And excluding energy prices, import prices were also seen up 0.3% on the month.

This article was written by Justin Low at www.forexlive.com.

Tech shares are leading the declines with Nasdaq futures also marked down by 1.1% currently. In case you missed it: Trump weighs broader, higher tariffs. Across-the-board hike of up to 20% considered

The 2 April deadline draws closer and Trump will surely want to make a show of it, having already labelled it as Liberation Day. It’s going to be a tricky next few days and it’s also important to consider this: What is really expected by the market for reciprocal tariffs: 5 ways to look at it

As things stand, risk sentiment is likely to stay on edge until we get to the big day. But come what may, it’s important to remember that markets will react however they want to react. And it’s not about what we, as traders, think is right or believing what markets should do.

The reception by broader markets can be however rational or irrational, but at the end that is what drives price movements.

And that’s something we have to accept in order to find pockets of opportunities this week. One might be right in arguing how significant or insignificant the impact of Trump’s tariffs might be but in the next few days, the market reaction i.e. emotional response will outweigh all of that until the dust settles.

This article was written by Justin Low at www.forexlive.com.

This is fitting as they also see a higher chance of a recession ahead of what’s coming from Trump’s tariffs on 2 April. So, expecting a more dovish Fed in response plays into their overall outlook/narrative.

This article was written by Justin Low at www.forexlive.com.

Just a reminder as daylight savings have kicked into gear in Europe over the weekend. For those unaffected by the change, it means that European markets and data releases will be an hour earlier than before. And this will continue until the final Sunday of October. Daylight savings have long been a controversial agenda in Europe but it looks like it is here to stay for some time yet.

This article was written by Justin Low at www.forexlive.com.