RBNZ meeting as well as inflation data from the US and China coupled with final Q4 GDP from the US and employment data from Canada will highlight the week ahead of us. Trump has moved deadline to open Strait of Hormuz to Tuesday and happenings in the Middle East will dominate headlines and influence markets.
USD
Iran foreign ministry spokesperson Baghaei stated that there is no direct communication between US and Iran and that all talks are going through intermediaries. He added that US proposals are “unrealistic, unreasonable and excessive”. US President Trump spoke during the week reiterating that Iranian military capacity is severely damaged adding that Iran will get hit “very hard” in the coming weeks. He did not mention anything about ground invasion and kicked the can down the road as he hinted that US could exit in 2-3 weeks. Additionally, hew did not provide any clarity on re-opening of Strait of Hormuz. Risk off mood prevailed in markets after his speech with indices, gold, bitcoin and antipodeans all turning lower while oil surged higher.
February retail sales data showed a 0.6% m/m growth, higher than 0.5% m/m as expected and improvement from -0.1% m/m seen in January. Ex autos category rose 0.5% m/m, same as the control group, while ex autos and gas category rose 0.4% m/m. The biggest contributors were clothing stores followed by sporting goods, hobby, musical stores and motor vehicles & parts dealers. On the other side of the spectrum, Furniture stores as well as food and beverage stores showed biggest declines. Food services and drinking places, a solid proxy for non-discretionary spending, grew 0.4% m/m. After a hiccup in January consumer is back to spending as this is a positive reading with healthy growth in control group (goes into GDP calculation).
March ISM manufacturing PMI rose to 52.7 from 52.4 in February while markets were bracing for a tick down to 52.3. This marks the highest reading in almost four years (since August of 2022). The report shows production increasing to 55.1 while new orders slipped to 53.5, but still very well in expansion territory. Concerns are located in employment which stayed in contraction and prices paid component which surged to 78.3 as energy prices jumped.
Employment report for the month of March saw economy add 178k jobs vs 60k jobs as expected after February print was revised down to show 133k job losses. The unemployment rate has ticked down to 4.3% while expectations were for it to stay unchanged at 4.4%. Participation rate ticked down to 61.9% while underemployment, U6, ticked up to 8% casting shadow on report. Additionally, average hourly earnings eased by more than expected to 0.2% m/m and 3.5% y/y from 0.4% m/m and 3.8% y/y the previous month. Looking across the sectors healthcare added 76k jobs followed by construction 26k and transport and warehousing 21k. Biggest losses were in financial activities where economy lost 15k jobs. All of the jobs added were in private sector as government shed 8k jobs. Overall, this is a strong jobs report which will lower chances of any rate cuts in the near future.
The yield on a 10y Treasury started the week at 4.44%, a high for the week, and finished the week at around 4.31%. The yield on 2y Treasury started the week at 3.93%, rose to 3.97% and finished the week at around 3.79%. Spread between 2y and 10y Treasuries started the week at 51bp and finished the week at 52bp. 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 spending time between $97 and $114 per barrel and finished the week at $112 making it a 94% YTD surge.
This week we will have ISM services PMI, minutes from the March meeting as well as final Q4 GDP print and both inflation measures (PCE and CPI).
Important news for USD:
Monday:
ISM Services PMI
Wednesday:
FOMC Meeting Minutes
Thursday:
GDP
PCE
Friday:
CPI
EUR
Preliminary Eurozone March CPI jumped to 2.5% y/y from 1.9% y/y in February, but a tick lower than 2.6% y/y as expected. Prices surged 1.2% m/m. Energy prices were the main culprit for the jump with food and services inflation slowing down and printing 2.4% y/y and 3.2% y/y respectively. Core CPI ticked down to 2.3% y/y from 2.4% y/y and as expected indicating that spillover from rising energy prices has not occurred yet. German preliminary CPI reading came in as expected at 2.7% y/y, jumping from 1.9% y/y in February on the back of surging energy prices caused by US – Iran war. CPI was up 1.1% m/m while energy prices jumped 7.2% m/m! Core reading and services inflation stayed the same at 2.5% y/y and 3.2% y/y respectively, confirming that this jump in inflation is entirely caused by increase in energy prices. French preliminary CPI jumped to 1.7% y/y from 0.9% y/y the previous month while markets were bracing for a 1.6% y/y print. Energy prices surged 7.3% m/m!
Eurozone final manufacturing PMI for the month of March was revised up to 51.6 from 51.4 as preliminary reported moving deeper into expansion. German reading was revised up with Italy beating expectations while French reading was revised down and Spain unexpectedly slipped back into contraction. The report shows two negative effects of US – Iran war, first is jump in suppliers’ delivery times as supply chains are heavily disrupted and the second is surge in input prices as energy prices are skyrocketing.
GBP
Final reading of Q4 GDP was unchanged at 0.1% q/q and 1% y/y. ONS notes that growth was caused by 1.2% increase in production sector while construction sector decreased by 2% with services sector staying flat on the quarter and showing no growth. Household and government consumption were revised down to 0.1% with former from 0.2% and latter from 0.4% as preliminary reported. Business investment showed a smaller decline of 2.5% vs 2.7% as preliminary reported.
Final print of manufacturing PMI for the month of March was revised down to 51 from 51.4 as preliminary reported thus falling further from 51.7 the previous month. Effects of US – Iran war led to suppliers’ delivery times and input costs surging which in turn caused manufacturing output to decline for the first time in six months. The report notes that new orders index is holding on which indicates that demand for manufacturing products is still there and that production will pick up after the situation in Middle East calms down.
BoE Governor Bailey stated that the bank is prepared to act if necessary but did that with a cautious tone emphasizing upside risks to inflation caused by surging energy prices. He added that the goal is to bring inflation down with the least possible damage to growth which is running below potential. Bailey clarified that committee may consider a precautionary rate hike, but it will all depend on how inflation returns to target and added that markets are getting ahead of themselves by pricing in rate hikes.
AUD
Minutes from the March RBA meeting showed hawkish message showed that members have agreed that current financial conditions are not restrictive enough and that further tightening of financial conditions would be required but they disagree on the timing of the next move. Consumer confidence has plunged to new record lows while at the same time inflation expectations reached new record highs putting RBA towards more hawkish stance. May will be a live RBA meeting with markets leaning towards another 25bp rate hike.
Official Chinese PMI data for the month of March saw all three sectors return into expansion. Manufacturing printed 50.4 beating expectations of a 50 print and way higher above 49 in February. This makes the highest reading in past twelve months for the sector as production and new orders printed expansionary figures while new export orders and employment indices got close to expansion. Subindex measuring prices of raw materials surged into 60s showing effects of supply disruptions caused by US – Iran war. Non-manufacturing PMI also beat expectations as it printed 50.1 thus helping composite print 50.5. The economy held well at the beginning of the year but now with supply chain disruptions caused by the war we could see deterioration in the coming months.
This week we will have inflation data from China.
Important news for AUD:
Friday:
CPI (China)
NZD
Business confidence plunged in March to 32.5 from 59.2 in February. Businesses are now more cautious regarding their outlook and are toning down their investment intentions due to growing uncertainties caused by growing geopolitical tensions. Inflation expectations are moving higher as companies see cost expectations and pricing intentions surge.
This week we will have RBNZ meeting. They will be the last major central bank to hold a meeting in this round, all seven others held it two weeks ago. No rate change is expected, initial plan is for December move, but it will be interesting if policymakers will sound more hawkish in the light of recent geopolitical tensions and oil supply shock.
Important news for NZD:
Wednesday:
RBNZ Interest Rate Decision
CAD
January GDP showed a 0.1% m/m growth vs coming in flat as expected. The entire growth came in from goods-producing industries as services sector showed no growth. The report showed that only 9 out of 20 sectors recorded growth.
This week we will have employment data.
Important news for CAD:
Friday:
Employment Change
Unemployment Rate
JPY
March CPI data for the Tokyo area showed slower price increases as headline number printed 1.4% y/y, tick down from 1.5% y/y in February with core sliding to 1.7% y/y from 1.8% y/y the previous month and “core core” ex fresh food, energy printed 2.3% y/y, down from 2.5% y/y in February. Base effects from last year as well as government subsidies intended to tame prices led to lower inflation readings and will keep inflation readings subdued in the first half of the year but with surge in energy prices as well as wage growth after spring wage negotiations these numbers will again go above targeted 2% in the second half.
Final March manufacturing PMI was revised up to 51.6 from 51.4 thus showing a smaller decline from 53 in February. The sector continues to expand as output, new orders and new export orders continued to grow but at a slower pace. Employment managed to post another, third consecutive, monthly improvement. Inflation pressures increased as input prices rose at a fastest pace in over eighteen months as energy prices surged due to US – Iran war. That in turn led to companies raising prices for its products thus pushing selling prices higher. Services eased to 53.4 from 53.8 the previous month but remain healthy and in expansion. The report shows that growth in both new orders and new export orders slowed down indicating slowing of both domestic and international demand. Employment continued to improve but the pace has slowed down. Input costs have surged to a new twelve-month high propelled by surge in energy prices. Companies increased prices as seen in output prices but at a slower pace. Business confidence dropped sharply due to increase in uncertainties caused by growing uncertainties due to the war in the Middle East. Composite was thus brought down to 53 from 53.9 in February.
CHF
SNB total sight deposits for the week ending March 27 came in at CHF460.9bn vs CHF457bn the previous week. This is the third consecutive week of rising deposits and they are now at levels not seen since mid-December of 2025. SNB has stated several times that negative interest rates remain an option but that hurdle for going below zero remains high adding that they are ready to intervene more forcibly in the markets in order to fight Swissy’s strength. March inflation data saw headline number climb to 0.3% y/y from 0.1% y/y in February but expectations were for a higher 0.5% y/y print. Surge in energy prices did not manage to push Swiss inflation much higher which is a very concerning sign as the country is on a verge of deflation. Core CPI growth was unchanged at 0.4% y/y.
