ECB and BoC meetings, inflation from the UK, Canada and New Zealand, employment from the UK and Australia, retail sales from the US and China will be of great importance on the economic news side of things, but tariff talks will still take the center stage and dominate markets.
USD
On Wednesday April 9 at 12:01am reciprocal tariffs went into full effect. Then during Wednesday President Trump stated that reciprocal tariffs would be postponed by 90 days on all countries except on China which will be hit by staggering 145% tariffs. Sudden pull back of tariffs led to massive risk on mood in the markets with NASDAQ finishing the day up 12%, second best day in the history of index, while S&P was up 8% for eight-best day in history.
March inflation report saw inflation decline by more than expected with headline number printing 2.4% y/y vs 2.6% y/y as expected and down from 2.8% y/y in February while core reading printed 2.8% y/y vs 3% y/y as expected, down from 3.1% the previous month. Headline number saw deflation as it printed -0.1% m/m while core reading rose by 0.1% m/m. Airlane fares saw the biggest price drop (-5.3%). These data points are from before introduction of tariffs so although they are very encouraging they cannot be taken at face value.
The yield on a 10y Treasury started the week at 3.86%, rose to 4.52%! due to disorderly action in the Treasuries market and finished the week at around 4.48%. The yield on 2y Treasury started the week at 3.43% and reached the high of 3.81%. Spread between 2y and 10y Treasuries started the week at 36bp and finished the week at 52bp as curve bear steepened further. FedWatchTool sees the probability of a 25bp rate cut at May meeting surging to at around 22%, while probability of a no cuts is around 78%. Gold has dropped below $3000 at the start of the week only to rise to new all time highs above $3200 as dip buyers stepped in. WTI crude has fallen bellow $55 for a new two-year low, then surged to $62 after reciprocal tariffs were postponed only to finish week at around $60. VIX has surged to over 50 on Wednesday.
This week we will have retail sales data. They will not have their usual usefulness as report will capture period before the tariffs, but still it will give us clues regarding health of US consumer.
Important news for USD:
Wednesday:
Retail Sales
EUR
Germany has formally agreed on coalition, CDU, CSU and SPD, that will lead the government. New policies state that government will examine possible reactivation of some nuclear power plants which would be a huge help for the industry and economy on the whole. The goal will also be a medium-term free trade agreement with US as well as reduction in import tariffs on both sides. Plan is also to cut corporate tax by 1% for five years starting in 2028.
This week we will have ECB meeting. Another rate cut is expected, bringing rate down to 2.25%.
Important news for EUR:
Thursday:
ECB Interest Rate Decision
GBP
February GDP saw a jump to 0.5% m/m from being flat in January and much stronger than 0.1% m/m as expected. Services sector contributed strongly with 0.3% m/m vs 0.1% m/m as was expected. Q1 GDP will show economy growing but UK was also hit with a 10% tariffs so it will reflect badly on Q2 GDP.
This week we will get employment and inflation data.
Important news for GBP:
Tuesday:
Payrolls Change
Unemployment Rate
Wednesday:
CPI
AUD
Impacted by huge tariffs Chinese Yuan plunged to the lows of 7.43 against the USD. China has retaliated by increasing tariffs on imports from the US to 84% and then again on Friday to 125%! China state that it will not retaliate further even if US continues ramping tariffs on them. March inflation report saw headline CPI print -0.1% y/y, second month in a row of negative prints, after a -0.7% y/y print in February. PPI, on the other hand, accelerated its decline as it printed -2.5% y/y vs -2.2% y/y the previous month. Both food and non-food inflation declined m/m. Beef prices led declines in food inflation while transportation facility prices had biggest decline in non-food inflation. Deflation is holding firm in China and with tariffs surging it should prompt PBoC to cut interest rates.
This week we will get employment data from Australia and industrial production and retail sales from China.
Important news for AUD:
Wednesday:
Industrial Production (China)
Retail Sales (China)
Thursday:
Employment Change
Unemployment Rate
NZD
RBNZ delivered a 25bp rate cut as was widely expected and brought official cash rate to 3.50%. Tariffs are front and centre of their concerns and as their effects become clearer RBNZ will have room to cut further. Global trade barriers put global growth in danger and in turn hurt the New Zealand economy. Future policy decisions will be determined by the outlook for inflationary pressure over the medium term and monetary policy response to tariffs will focus on the medium-term implications for inflation.
This week we will get Q1 inflation data.
Important news for NZD:
Thursday:
CPI
CAD
Building permits for the month of February rose by 2.9% after falling by 4.3% in January. CAD has been moved by risk on/risk off mood in the markets for the entire week. The currency benefited from broad USD weakness and reached previous resistance from 2022 now turned to support in USDCAD.
This week we will get inflation data and BoC meeting. BoC has stated at their previous meeting that they are pausing and evaluating effects of tariffs so there should be no change to rate at this meeting, but a 25bp rate cut cannot be ruled out.
Important news for CAD:
Tuesday:
CPI
Wednesday:
BoC Interest Rate Decision
JPY
February labor cash earnings saw a growth of 3.1% y/y after a downwardly revised 1.8% y/y growth in January. Still, with inflation being high, real wages have printed -1.2% y/y for the month making it a second consecutive month of declining real wages. Spring wage negotiations are in full force and those wage increases should help propel real wages back in positive territory. Japan economy minister will start negotiations with US on tariffs on April 17.
CHF
SNB total sight deposits for the week ending April 4 came in at CHF443.7bn vs CHF451.2bn the previous week. Another small move within well-established range. Due to risk off mood in the markets caused by tariff implementation Swissy has strengthened a lot so it would be interesting to see if SNB will use sight deposits to fight Swissy strength.
