April 01, 2025

“The week’s major data points begin today with eurozone CPI inflation and job openings data in the US. There has been some choppiness across markets as investors prepare for tomorrow’s tariff announcements in the US.”

Sam Cornford – Head of Trading

USD

With markets looking ahead to the data and tariff risk this week, the dollar made some modest gains versus the yen and the euro while rallying against the likes of CAD, AUD, and NOK. The focus tomorrow will be on the content and severity of Trump’s flagship tariff announcement, and we can expect some defensive trading until that event risk has passed. There are some data tests in the meantime, however, with JOLTS and the ISM manufacturing survey on the calendar today. Job openings are expected to ease a touch from 7.74M to 7.66M, and the consensus sees the ISM manufacturing PMI ticking back into contractionary territory at 49.5. If there are any signs that the hard data is beginning to buckle, the dollar will struggle to hold its ground. With a total of three rate cuts now priced for 2025, however, the risks might be skewed to the upside.

GBP

Sterling dipped below 1.29 very briefly yesterday before regaining some ground overnight. House prices slowed in March as the deadline for the increase in stamp duty approached and the resulting rush to buy slowed. While a speech from the BoE’s Megan Greene and a final manufacturing PMI print might nudge the pound today, the big moves this week are going to come from the eurozone and US data. ‘Productive’ talks between Trump and Starmer on an ‘economic prosperity’ deal at the weekend might help to make sterling a good call in the case of an aggressive tariff approach tomorrow.

EUR

The euro has just finished its best quarter since 2022, thanks largely to a softening US economy and huge incoming fiscal stimulus in Europe. Q2 is likely to be just as interesting, and it begins today with the CPI inflation report for March. The survey estimates are looking for some cooling on both the headline (2.2%) and core (2.5%) measures, validating the market’s 71% view on another rate cut at the April meeting. That is lower than the near 90% probability that was being priced in yesterday morning, after a Bloomberg article hinted that more ECB policymakers were open to pausing instead this month.

Markets

The impending tariff deadline is spurring some choppiness in equities. The weak mood that triggered 1.5% drop in the Euro Stoxx 50 yesterday initially followed through into the US session, before the S&P 500 reversed its losses and finished 0.6% higher on the session. Stock futures are also pointing to a rebound in Europe this morning.

Main Economic Events (All Times CET)

11:00am: Eurozone CPI & Unemployment Rate
4:00pm: US JOLTS Job Openings Survey & ISM Manufacturing Survey

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