Inflation week ahead of us with data coming from UK, New Zealand and Canada, followed by preliminary April PMI from the Eurozone and UK as well as employment data from the UK and retail sales data from the US. Additionally, we will get new round of earnings and all eyes will be on US – Iran negotiations and developments in the Middle East.
USD
US – Iran talks in Islamabad fell apart, The main point of contention was Iran’s nuclear program. US wants them to stop it and cancel it while Iran does not want to budge on it and compromise was impossible. As a result of failed negotiations US sailed in its navy and blockaded all maritime traffic entering and exiting Iranian ports. Straight of Hormuz will be available for transit to all vessels not calling at Iranian ports. As a result of this announcement WTI prices surged $10 higher on market open to $105. The blockade started on Monday April 13 at 10 AM EST. Iran Foreign Minister stated that the Straight of Hormuz is completely open with a caveat “for the remaining period of the ceasefire.” Negotiations between countries are set to continue on Sunday. President Trump thanked Iran for the reopening of Straight and added that blockade will end soon.
US Treasury Secretary Bessent stated that tariffs could be reinstated as early as July. Nominee for the position of Fed Chairman Kevin Warsh will have a hearing in front of the Senate on Tuesday April 21 at 10 AM EST. President Trump stated that he hopes Warsh will be confirmed as the new Fed Chairman adding that if Powell does not want to leave he will be forced to fire him.
The yield on a 10y Treasury started the week at 4.34%, rose to 4.37% and finished the week at around 4.26%. The yield on 2y Treasury started the week at 3.81%, rose to 3.86% and finished the week at around 3.71%. Spread between 2y and 10y Treasuries started the week at 52bp and finished the week at 55bp. FedWatchTool sees the probability of a 25bp rate hike at May meeting at around 1% while probability of no change is at around 99%. WTI had another volatile week reaching as high as $105 on the market open and then dropping on Friday on news that Straigh of Hormuz is full open to as low as $83 only to finish the week at around $85 per barrel. S&P has crossed the 7100 level and thus reached a new all-time-high with NASDAQ posting fourteen-straight up days and also reaching new all-time-high crossing the 26500 level.
This week we will have consumption data expected to show slower growth.
Important news for USD:
Tuesday:
Retail Sales
EUR
Elections in Hungary had a record turnout with 79% people coming to polls which led to Center-Right party Tisza winning two-thirds majority, supermajority, in the parliament. They are more EU friendly party so this would boost cohesion in the bloc, it may unlock EU funding for Hungary and is generally positive for the EUR. Former Prime Minister Victor Orban has been removed from power after 16 years and new Prime Minister will be Peter Magyar.
ECB President Lagarde spoke at the IMF and warned about risks to growth with current geopolitical conditions. She also emphasized bank’s data dependency which tempered down chances of a rate hike in April. Additionally, she emphasized importance of taking a medium-term view which could be interpreted as looking past the jump in oil prices. However, according to current market movements, every $10 rise in oil prices leads to roughly 25bp increase in rate hike expectations. IMF has lowered expected EU GDP growth to 1.1% from 1.3% previously. As chances of an April rate hike decline chances of a single rate hike in June increase.
Final March CPI print saw headline number revised up to 2.6% y/y from 2.5% y/y as preliminary reported while core was unchanged at 2.3% y/y. As a reminder, core has ticked down from 2.4% y/y in February emphasizing that the increase in inflation is entirely due to high energy prices, rising 7% m/m, and that those prices are not yet spilling over to other sectors of the economy.
This week we will have preliminary April PMI data expected to show improvements in manufacturing and decline to contraction in services.
Important news for EUR:
Thursday:
Manufacturing PMI (Eurozone, Germany, France)
Services PMI (Eurozone, Germany, France)
Composite PMI (Eurozone, Germany, France)
GBP
February GDP surprised to the upside posting a 0.5% m/m increase, same as in February last year, with January reading being revised up to 0.1% m/m. Growth was equally distributed with services and industrial production both rising by 0.5%. There was also a strong growth in the construction output which rose 1% m/m. These data points are encouraging but they are stale as situation in the Middle East will drag growth down in the coming months.
This week we will have employment and inflation data as well as preliminary April PMI data.
Important news for GBP:
Tuesday:
Payrolls Change
Unemployment Rate
Wednesday:
CPI
Thursday:
Manufacturing PMI
Services PMI
Composite PMI
AUD
March employment data saw economy add another 17.9k jobs thus adding jobs every month in 2026 and a fourth construction month of job gains. The unemployment rate remained at 4.3% while participation rate ticked down to 66.8%. Composition of jobs is very satisfying as all of the jobs added were full-time (52.5k) while part-time jobs declined by 36.5k. With labor market holding steady RBA is fully focused on bringing inflation down. Since inflation is running above the target RBA will continue with its rate hikes and this employment report just adds more hawkishness to AUD.
Chinese March trade balance data saw a miss in exports (2.5% y/y vs 8.6% y/y as expected) and a surge in imports (27.8% y/y vs 11.2% y/y as expected) and trade surplus shrank as a result of that coming in at more than twice lower than it was expected ($51.1bn vs $108.2bn). Semiconductors, cars and ships were the biggest exports in the first quarter. Decline in exports warns of slowing demand around the world while imports are surging due to rise in higher-tech product prices. So far, the effects of energy supply disruptions caused by US – Iran war are not seen in the data. The biggest issue for China’s leadership is that exports are large contributor to the overall GDP and if they continue to stumble it will reflect negatively on growth in 2026.
Q1 GDP managed to beat expectations coming in at 1.3% q/q and 5% y/y strengthening from 1.2% q/q and 4.5% y/y in the fourth quarter of last year. Service sector grew 5.2% y/y. One big caveat from this report is that it shows economic activity before disruptions caused by US – Iran war. Chinese officials warned that geopolitical situation is very complex and could negatively impact growth in the second quarter as external demand remains the main driver of growth. Economic activity saw industrial production beat expectations (5.7% y/y vs 5.5% y/y) while retail sales missed expectations (1.7% y/y vs 2.4% y/y). Despite government’s best efforts the economy remains split into strong production and weak consumption.
NZD
ANZ sees last week’s RBNZ message as hawkish and they now expect bank to raise OCR already in July, much faster than previous projection for a December rate hike. They highlight the upside inflation risks as the main reason for their new projection.
This week we will have Q1 inflation data.
Important news for NZD:
Tuesday:
CPI
CAD
Building permits for February plunged 8.4% m/m after rising 3.5% m/m in January with weaknesses across all sectors of construction. Manufacturing sales and wholesales trade both rebounded in February but at a slower pace than expected with former printing 3.6% and latter 2%. Additionally, January figures were revised down with manufacturing sales at -3.1% and wholesales trade at -1.1%.
This week we will have inflation data.
Important news for CAD:
Monday:
CPI
JPY
Yield on a 10y JGB reached new multi-decade high rising to 2.49% on market open as surge in oil prices exacerbates fears of runaway inflation. Chances of rate hike in April are dwindling down but talks about intervention to support JPY are ramping up.
CHF
SNB total sight deposits for the week ending April 10 came in at CHF461.3bn vs CHF464.3bn the previous week. A small decline but nothing out of the ordinary as deposits are within well-established range and EURCHF has returned above 0.92 thus not prompting SNB to take any measures. Minutes from the March SNB meeting showed that members see elevated volatility when evaluating financial situation. Monetary conditions are tightening as Swissy strengthened since December meeting. Bank members still want to avoid negative rates as they project that downside risks will overwhelm any upside potential.
