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We got some good weekend news on tariffs for a change as Bloomberg’s Josh Wingrove reported that tariffs are now planned to be more targeted than threatened.

“It’s shaping up as more focused than the sprawling, fully global effort
Trump has otherwise mused about, officials familiar with the matter
say,” the report says.

The optimism might be misplaced as it highlights that the countries spared will be the ones with trade deficits to the USA or barely any trade at all. Still, it’s a change in tone S&P 500 future are up 64 points, or 1.1%.

In terms of today’s economic calendar, the main event is the March S&P Global manufacturing and services PMI, which is due at 9:45 am ET. We have seen some sharp deterioration in sentiment measures but plenty of people are skeptical that it will flow into the hard data. That said, another bad number today — particularly if one of the main measures falls below 50 — will add to the angst. The services one fell to 51.0 in February from 56.9 shortly after the election.

Aside from that, comments from the BOE’s Bailey (2 pm ET) and the Fed’s Barr (3:10 pm ET) are the lone notable items.

This article was written by Adam Button at www.forexlive.com.

Headlines:

• The risk mood keeps more positive so far on the session
• ECB’s Makhlouf says not going to comment on April rate cut
• ECB’s Cipollone: Inflation target may be reached sooner than last projections indicated
• BOJ governor Ueda says will conduct appropriate monetary policy to achieve 2% price target
• France March flash services PMI 46.6 vs 46.3 expected
• Germany March flash manufacturing PMI 48.3 vs 47.0 expected
• Eurozone March flash services PMI 50.4 vs 51.0 expected
• UK March flash services PMI 53.2 vs 50.9 expected
• China reaffirms to implement more proactive fiscal policy in 2025

Markets:

• AUD leads, JPY lags on the day
• European equities higher; S&P 500 futures up 1.1%
• US 10-year yields up 4.6 bps to 4.298%
• Gold up 0.1% to $3,027.34
• WTI crude up 0.7% to $68.75
• Bitcoin up 1.7% to $87,576

There wasn’t much in terms of headlines on the session but we are seeing some decent market moves to kick start the new week.

Of note, risk sentiment is on the up as the countdown to Trump’s tariffs on 2 April continues. The news over the weekend was that we might see a more positive turn as noted here and that is helping with the overall risk mood.

US futures are storming higher with dip buyers looking to get their groove back with tech shares leading the way. European indices opened on a strong footing as well but are seeing gains pared back a little during the session. Still, it’s a positive showing on the risk front to start the day.

The French and German PMI data didn’t really offer too much amid a contrast between the manufacturing and services sector. Overall, business activity remains little changed compared to last month and that is keeping things in check ahead of the ECB decision in April.

In FX, the dollar is slightly softer at the balance amid the pick up in risk sentiment. EUR/USD is up 0.3% to 1.0845 but contained by large option expiries on the day. Meanwhile, GBP/USD is seen up 0.3% to 1.2955 and USD/CAD down 0.2% to 1.4315 currently. The aussie is looking for a decent bounce in erasing Friday’s drop to move close to 0.6300 at the moment.

Besides that, the yen is the laggard as bond yields are also keeping higher on the day. USD/JPY is marked up by 0.3% to 149.70 currently.

In other markets, gold is keeping steady around $3,027 while oil is keeping a modest bounce off its September 2024 lows from earlier this month as WTI crude trades up to $68.75 now.

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

The terminal rate that the firm sees the BOE cutting to is still 3%, in which they view as “neutral”. But “with the near-term cost headwinds”, they are revising their forecast timeline in seeing the central bank now cutting once every quarter starting from September. That will mean reaching the 3% estimate in Q3 2026. HSBC adds that “there are risks in both directions” now.

HSBC still sees the BOE cutting the bank rate in May and August but previously anticipated a rate cut “at every meeting from September 2025 to February 2026” to a 3% terminal rate.

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

S&P 500 futures are up roughly 1% on the day and that’s keeping the market mood in a better spot to start the new week. Tech shares are leading the way after arresting four consecutive weeks of declines in trading last week. Are dip buyers set for a continued rebound this week?

It’s going to be a tricky one especially with the countdown ahead of the 2 April reciprocal tariffs. The latest headline over the weekend here is more optimistic at the balance. However, you can bet Trump will want to talk up a big game in the next few days and that could still cause some hiccups along the way.

European indices might have gotten off to a strong start but they are fading gains a little on the session thus far. The DAX is now up just 0.3% with the CAC 40 only up 0.2% currently. It’ll be a tricky one for European indices with tariffs in focus.

The dollar is slightly lower at the margin, with EUR/USD up 0.2% to 1.0830 though price action is trapped by large option expiries. USD/JPY is up 0.2% to 149.60 but the dollar is down slightly elsewhere across the board.

GBP/USD is up 0.2% to 1.2950 and USD/CAD down 0.1% to 1.4335 currently. Meanwhile, AUD/USD is seen up 0.4% to 0.6293 at the moment.

Besides the focus on tariffs, month-end and quarter-end will also slowly come into focus in the week ahead. That will potentially offer up a bit of a trickier story for broader markets in the days ahead as well.

But as always, the technicals are the best indicator to try and make sense of all of that. And for now, the better risk mood points to US stocks looking to break the negative momentum to start the new week. That as the S&P 500 looks poised to firmly test waters above its 100-hour moving average for the first time this month:

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

• Services PMI 53.2 vs 50.9 expected vs. 51.0 prior
• Manufacturing PMI 44.6 vs 46.4 expected vs. 46.9
  prior
• Composite PMI 52.0 vs 50.3 expected and 50.5 prior.

Key findings:

• Flash UK PMI Composite Output Index at 6-month high.
• Flash UK Services PMI Business Activity Index at 7-month high.
• Flash UK Manufacturing Output Index at 17-month low.
• Flash UK Manufacturing PMI at 18-
  month low.

Comment:

Commenting on the flash PMI data, Chris Williamson,
Chief Business Economist at S&P Global Market
Intelligence said:

“An upturn in business activity in March brings some
good news for the government ahead of the Chancellor’s
Spring Statement, offering a respite from the recent flow
of predominantly downbeat economic data. However,
just as one swallow does not a summer make, one good
PMI doesn’t signal a recovery.

“The signal from the flash PMI is an economy eking out a
modest expansion in March, consistent with quarterly
GDP growth of just 0.1%, but with employment
continuing to be cut thanks to concern over costs and
the uncertain outlook. Confidence is still running close to
January’s two-year low.

“The improvement is also being driven by only small
pockets of growth, notably in financial services, with
consumer-facing business and manufacturers
continuing to struggle against headwinds both at home
and abroad.

“These headwinds include the additional costs imposed
on businesses in the Budget, low confidence among
businesses and households, and sluggish demand at
home and abroad, the latter linked to heightened
geopolitical uncertainty resulting from US tariff policies.

“Worryingly, these headwinds are likely to grow in force
as higher National Insurance contributions come into
effect in April, coinciding with the anticipated review of
US tariff policy on 2nd April, the latter having the
potential to further subdue global economic growth and
dampen UK trade.”

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

• Domestic sight deposits CHF 449.2 bn vs CHF 448.5 bn prior

There’s not much in it here with there being little change in overall sight deposits compared to the week before.

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

• Prior 50.6
• Manufacturing PMI 48.7 vs 48.2 expected
• Prior 47.6
• Composite PMI 50.4 vs 50.8 expected
• Prior 50.2

It’s a tale of two stories when it comes to the Eurozone business activity in March. While the manufacturing print was a 26-month high, the services print slumped to a 4-month low amid contrasting fortunes. The pace of expansion was better than in February overall but still, it’s just a marginal growth at best. New business continues to suffer as demand conditions remain soft but at least employment conditions are seen stabilising a bit as a whole. In terms of prices, there wasn’t too much change compared to the month before. HCOB notes that:

“Just in time with the beginning of spring we may see the first green shoots in manufacturing. While we should not be carried
away by a single data point, it is noteworthy that manufacturers expanded their output for the first time since March 2023. It’s
also encouraging, that the index output has risen for three months straight. This is complemented by a much softer fall in
new orders and employment. One could pour some cold water on this development arguing that it’s the temporary tariffrelated import boom from the US which has driven the improvement in manufacturing. However, given the will of Europe, to
invest heavily in defense and infrastructure – in Germany a corresponding historical fiscal package has been approved only
last week – hope for a more sustained recovery seems well founded.

“The price development in the services sector, which is very much under scrutiny of the ECB, will be well received by the
doves of the monetary authority. Both input costs and selling prices are rising at a slower pace compared to recent months.
Lower input cost inflation points to less pressure from wages which are a key ingredient of input costs in the labour intensive
services sector. Meanwhile, in manufacturing, price increases for both selling and purchasing remain moderate, helped
along by declining energy costs. However, there are still plenty of risks on the ECB’s radar, like potential retaliation tariffs
from the US, measures to curb goods coming from China, and higher food prices spurred by extreme weather. These
factors, coupled with overall uncertainty, make some ECB members hesitant to cut rates too aggressively.

“Interestingly, Germany outperformed its key European trading partner France in March in both manufacturing output and
services activity. Still, if we zoom out and look over the past two years, France’s industry has only contracted by about 1%
since early 2023, while Germany’s has dropped by roughly 8%. In this respect, Germany has a lot of catching up potential.

“Business expectations are well below average in the services sector and at average in manufacturing, which is of small
wonder given the challenges companies are faced with amid the challenges around tariffs, geopolitical tensions and
uncertainties surrounding monetary policy. There is some likelihood, that Europe seizes the opportunity and shows more
unity with respect to reforms, defense spending, and completing the capital market union, to name a few things. This could
send a clear message that Europe’s position as a key business hub is set to strengthen in the years ahead.”

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

• Manufacturing PMI 48.3 vs 47.0 expected vs. 46.5 prior
• Services PMI 50.2 vs 51.6 expected vs. 51.1 prior
• Composite PMI 50.9 vs 51.0 expected and 50.4 prior

Key findings:

• HCOB Flash Germany Composite PMI Output Index at 10-month high.
• HCOB Flash Germany Services PMI Business Activity Index at 4-month low.
• HCOB Flash Germany Manufacturing PMI Output Index at 36-month high.
• HCOB Flash Germany Manufacturing PMI at 31-month high.

Comment:

Commenting on the flash PMI data, Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, said:

“What a pleasant surprise – manufacturers have ramped up production for the first time in nearly two years. This didn’t just
come out of nowhere, though. The output index has risen in five of the past six months. It might be linked to the import boom
from the US, where companies are snapping up goods from abroad to get ahead of looming tariffs. If that’s the case, we
could see a bit of a setback once those tariffs kick in. On the bright side, Germany’s massive infrastructure and defence
package, recently greenlit by both parliamentary houses, could give manufacturing a moderate boost in the near future. It’s
likely to instil some much-needed confidence in Germany as a business hub.

“Economic growth in the first quarter looks promising, with the composite PMI staying above the expansionary threshold
every month. Thanks to the fiscal package, this could mark the beginning of a more sustained recovery. Of course, there are
risks – US tariffs and a sluggish services sector, which barely grew in March, are worth keeping an eye on. But with a new
government likely to form in the coming weeks, confidence might rebound quickly. In fact, the PMI survey shows that firms in
both manufacturing and services are feeling more optimistic about future output.

“While manufacturers seem to be finding their footing, service providers are hitting the brakes. Service activity nearly
stagnated in March, and new business took a sharp dive. To make matters worse, service companies couldn’t raise selling
prices as much as they had in recent months. That said, the expansionary fiscal policy should start making waves in the
second half of the year, boosting the service sector as infrastructure and defence projects drive up demand. Most of the real
impact, though, will likely be felt in 2026.

“Employment is somewhat less under pressure in manufacturing and growing at a continued moderate pace in services.
This may be an indication that the German economy is bottoming out. It means there is a chance of a cyclical upturn and the
fiscal package more than compensating for the damage that will most likely be done by the tariff policy of the US.”

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

• Prior 45.3
• Manufacturing PMI 48.9 vs 46.4 expected
• Prior 45.8
• Composite PMI 47.0 vs 46.5 expected
• Prior 45.1

It’s a modest improvement to the month before but French business activity continues to keep in contraction territory in March. The improvement in the manufacturing sector is a welcome development at least but demand conditions remain weak overall and there were further job losses recorded. Meanwhile, the outlook remains pessimistic as well with business confidence sitting at near five-year lows. All of this belies the improvement in the numbers above. HCOB notes that:

“France’s economy is struggling to gain momentum. Although the HCOB French Flash PMI improved in March compared to
the previous month, it remains in contraction territory. The French political landscape, which has significantly negatively
impacted market sentiment in recent months, is now somewhat less unstable. France passed a delayed budget law for 2025
in February which helped it avoid a downgrading of its credit rating, but there is still a high degree of uncertainty regarding
future economic policy.

“While the French industry is struggling, there are signs of improvement. The Flash Manufacturing PMI made a significant
leap compared to the previous month, though it still signalled a deterioration in operating conditions. Uncertainty both
domestically and internationally, competitive pressures, and subdued demand in key sectors such as automotive,
construction, and agriculture were cited as reasons for the muted outlook, although hopes for improved activity did rise to
their strongest level in nine months.

“Meanwhile, the HCOB flash PMI data for services offers no relief for this sector in March. Although there was a softer
decrease in business activity compared to the previous month, the rate of decline remained solid. Economic uncertainty,
geopolitical tensions, and reduced demand are weighing on service sector output. The only reassuring news is that input
cost pressures have somewhat eased, and service providers’ pricing power has slightly increased.”

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

• To prioritise boosting domestic consumption
• To support all-round expansion of domestic demand
• Will foster new quality productive forces to sustain economic growth

This echoes remarks from finance minister Lan Fo’an in a symposium in Beijing over the weekend as well. Again, very much on the surface stuff as China continues to try and rally the troops to bolster the narrative of reviving domestic demand and consumption.

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

• Eurostoxx +0.8%
• Germany DAX +0.9%
• France CAC 40 +0.8%
• UK FTSE +0.5%
• Spain IBEX +0.9%
• Italy FTSE MIB +0.8%

There was a bit of a setback last week before the modest rebound on Friday, though German stocks lagged. Still, it’s been a good month for European indices overall and investors are hoping to wrap things up with a more positive note this week. Spain’s benchmark index is a standout to start the week, moving to its highest since 2008.

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

The talks will involve delegations from both countries and will be taking place in Riyadh again. Do be aware that the US camp had met with their Ukrainian counterparts separately late last night.

The supposed ceasefire has been nothing but that with both Russia and Ukraine still sending drones to attack each other all through the week. Kyiv suffered one of its heaviest attacks over the weekend, with three people killed during Russia’s drone strike.

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