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The Wall Street Journal (gate) is reporting that Trump has warned US automakers not to raise prices:

• Trump told the executives that the White House would look unfavorably on such a move, leaving some of them rattled and worried they would face punishment if they increased prices, people with knowledge of the call said.

• Instead, Trump said, they should be grateful for his elimination of what he called President Joe Biden’s electric-vehicle mandate, which involved subsidies and emissions requirements to encourage electric-car production.

Automakers in the US say they face a surge in costs due to tariffs on Canada and Mexico – Trump’s tariffs apply not only to imported cars but imported parts.

Link the Journal article is here if you can access it.

This article was written by Eamonn Sheridan at www.forexlive.com.

Update: Carney’s spokeswoman says they have not spoken.

We will keep a close eye to see what leaks out.

Hopefully it’s a chance for a reset but I’m not holding my breathe.

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

Trump speaking imminently – stay tuned!

This article was written by Eamonn Sheridan at www.forexlive.com.

The data post is here:

• Tokyo February headline CPI +2.9% y/y (2.7% expected)

I pointed out there that:

• All three of the measures have come in above expected, and all of them above (or equal to in the case of the headline) the February reading.
• To round it out, all three are also above the Bank of Japan 2% target.

The yen has been marked higher, here is USD/JPY:

This article was written by Eamonn Sheridan at www.forexlive.com.

All three of the measures have come in above expected, and all of them above (or equal to in the case of the headline) the February reading. At the margin you’d think that this is positive for a Bank of Japan rate hike and also for the yen.

Tokyo CPI +2.9% y/y

• expected 2.7%, prior +2.9%

CPI excluding fresh food 2.4% y/y

• expected 2.2%, prior 2.2%

CPY excluding fresh food & energy 2.2% y/y

• expected 2.0%, prior 1.9%

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As background to the Tokyo area inflation data:

• National-level CPI data for this month will follow in about three weeks, it takes longer to gather and collate the national data.
• Tokyo CPI is a sub-index of the national CPI
• It measures the change in prices of goods and services in the Tokyo metropolitan area
• Its considered a leading indicator of national CPI trends because Tokyo is the largest city in Japan and is a major economic hub
• Historically, Tokyo CPI data has been just slightly higher than national Japan CPI data. The cost of living in Tokyo is a touch higher than in most other parts of Japan. Higher rents, for example

This article was written by Eamonn Sheridan at www.forexlive.com.

Morgan Stanley expects a firmer reading in February’s core personal consumption expenditures (PCE) price index, forecasting a monthly gain of 0.35%. The bank attributes the strength to persistent goods inflation and a rebound in core services prices excluding housing.

In contrast, the headline PCE index is projected to rise by a slightly softer 0.32% month-on-month, with declines in food and energy prices helping to temper the overall figure. The divergence between headline and core inflation underscores the stickiness of underlying price pressures that the Federal Reserve is monitoring closely.

• “Core inflation looks set to remain firm, with price pressures broadening again in the goods sector and some reacceleration in services outside of housing”

The bank’s forecast, if realised, would reinforce concerns that progress on disinflation may be stalling, potentially complicating the Fed’s timing on rate cuts. Markets are watching the upcoming PCE data closely, as it is the Fed’s preferred inflation gauge.

**

The data is due at 1230 GMT / 0830 US Eastern time:

This article was written by Eamonn Sheridan at www.forexlive.com.

Mexico’s peso has shown resilience in early 2025, gaining about 3.2% against the U.S. dollar, but Wells Fargo expects it could weaken ahead. The currency remains overvalued, according to the bank, and faces growing headwinds—including a likely recession triggered by potential U.S. tariffs and the risk of sovereign credit downgrades.

Wells Fargo projects Mexican GDP growth of just 0.1% this year, with a recession likely by the second quarter. If broad 25% tariffs are imposed in April, the economic downturn could be deeper.

While any peso depreciation is expected to be gradual due to “tariff fatigue” and diplomatic efforts by President Claudia Sheinbaum, Wells Fargo says the risk of a sharp drop remains high.

Wells Fargo does not anticipate the Bank of Mexico it will intervene in currency markets if the peso weakens, allowing it to adjust in line with economic fundamentals.

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This article was written by Eamonn Sheridan at www.forexlive.com.

The euro is set to appreciate meaningfully over the next two years, according to Bank of America, as investors begin to price in diverging macroeconomic and policy trajectories in the U.S. and eurozone.

In a note to clients, BofA strategists outlined a constructive outlook for the single currency, projecting it to reach $1.15 against the U.S. dollar by the end of 2025, and extend gains to $1.20 by the end of 2026.

The bank sees two key catalysts behind the expected move: potential stagflation risks in the U.S. under a second Trump administration, and structural tailwinds emerging from a shift in European fiscal policy.

BofA expects a combination of renewed tariffs and fiscal tightening to weigh on U.S. growth while keeping inflation pressures elevated — a scenario reminiscent of stagflation.

In contrast, the outlook for Europe is becoming more supportive. BofA points to signs of a shift in Germany’s traditionally cautious fiscal stance, with increased public investment and defence spending likely to support growth across the eurozone. These reforms, alongside broader EU-level fiscal coordination, could mark a structural inflection point for the region’s economic resilience.

This article was written by Eamonn Sheridan at www.forexlive.com.

Coming up from the Federal Reserve at the bottom of the hour, 2030 GMT / 1630 US Eastern time:

• Federal Reserves Barkin and Collins speaking after US RTH close on Thursday

Tokyo area inflation data follows later.

This article was written by Eamonn Sheridan at www.forexlive.com.

Australian national election will be on May 3, Prime Minister Anthony Albanese has (finally) set the date.

The current government in Australia is centre-left, while the opposition is centre-right.

Australian financial markets are rarely troubled too much by a change in government. The differences between the two sides are rarely vast.

We await official election policies but top-of-mind right now is that:

• the government has promised new income tax cuts
• the opposition, on the other hand, have promised petrol (gasoline) tax cuts

Betting markets currently favour the opposition.

This article was written by Eamonn Sheridan at www.forexlive.com.

Data from New Zealand, ANZ-Roy Morgan Consumer Confidence

Falls to 93.2 in March 2025

• prior 96.6

This article was written by Eamonn Sheridan at www.forexlive.com.

• US initial jobless claims 224K vs 225K estimate
• US February advanced goods trade balance -$147.391 billion vs -$155.5 billion expected
• US Q4 final GDP +2.4% vs +2.3% expected
• US February advance wholesale inventories +0.3% vs +0.4% expected
• US February pending home sales +2.0% vs +1.0% expected
• Australian PM set to call a May 3 election
• Canada won’t impose counter-tariffs on the US until April 2
• Carney: Our response to the latest tariffs is to fight
• Ontario expects the US to significantly lower auto tariffs – report
• Mexican central bank cuts rates by 50 vs 50 bps cut expected
• US CBO projects huge US deficits forever based on current laws (that’s before tax cuts)
• US treasury auctions of $44 billion of 7-year notes at a high yield of 4.233%
• Ukraine Pres. Zelenskyy says Ukraine will give US evidence of Russia violating cease-fire
• Sheinbaum: We are going to give a response to US tariffs after April 2
• ECB’s de Guindos We are optimistic with regard to inflation

Markets:

• S&P 500 down 0.3%, Nasdaq -0.5%
• WTI crude oil up 18-cents to $69.83
• US 10-year yields up 2.5 bps to 4.36%
• Gold up $37 to $3056
• GBP leads, JPY lags

The economic calendar was busy and there is a segment of the market waiting for an ugly rise in initial jobless claims but it didn’t happen today. However the US trade deficit was near a record once again and that should be a drag on GDP that we see in tomorrow’s Atlanta Fed tracker.

None of the data left much of a mark on the US dollar but we will get the latest PCE numbers tomorrow with a focus both on the consumption side and the inflation side.

Flow-driven trading led to the most-notable moves today with spikes in sterling and the euro into the London fix. Both those moves of around 25 pips quickly faded afterwards. Still the US dollar was generally soft as the thinking around tariffs is shifting. At one point they were dollar positive but we’re at the point where the market is debating if the US administration doesn’t care about short-term growth anymore and that’s weighing.

All the turmoil in global affairs continues to push investors to safe haven. Gold has gone parabolic since this time last year when Trump passed Biden in the polls and it rose further today. There was a brief round of profit-taking and a quick $25 drop but that dip was bought aggressively and there were new highs at $5059 later.

In the stock market, angst was high coming into the session and US equities slumped at the open but after the weak hands were shaken out there were signs of a cooling of trade tensions and sentiment stabilized. AI companies were also hit as that trend is threatened again and eyes are on CoreWeave’s IPO slated for tomorrow.

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