Daily Market Outlook by Kate Curtis from Trader's Way

[katetrades]

Forex Major Currencies Outlook (Mar 17 – Mar 21)

Fed, BoE, BoJ and SNB meetings coupled with retail sales from the US and China as well as inflation from Canada, employment from Australia and Q4 GDP from New Zealand will highlight this jam packed week ahead of us.

USD

President Trump has added additional 25% tariffs on steel and aluminium coming from Canada that should have taken effect on March 12. After Ontorio Prime Minister decided to drop tariffs on energy exports to the US, Trump removed those additional tariffs and only initial 25% tariffs remained. Trump also announced 25% tariffs on EU imports and added a threat of a huge 200% tariff on wines and alcoholic products if they put tariffs on American whiskey. Major bank analysts are increasing probabilities of recession in the US and state uncertainty around tariffs as a major factor coupled with weak consumer confidence.

February inflation report showed headline number down to 2.8% y/y from 3% y/y in January. Monthly print came in at 0.2% vs 0.3% as expected with 0.216% unrounded. Shelter was once again main cause for increase increasing 0.3% m/m and 4.2% y/y which is a smallest yearly increase since December of 2021 . Airfares were the main reason for decline in inflation as they fell by 4% m/m. Core CPI declined to 3.1% y/y from 3.3% y/y the previous month while markets were expecting a 3.2% y/y print. Core m/m reading came in at 0.2% vs 0.3% as expected with 0.227% unrounded. Shelter less energy services rose 0.3% m/m. Supercore printed 0.182% m/m and 2.22% y/y. This decline, although still above 2% when annualized, 0.17% m/m is needed for 2% inflation, will be welcomed by Fed as core services and healthcare showed clearer signs of easing price pressures. PPI has come weaker than expected but figures that go into PCE calculation came in stronger.

The yield on a 10y Treasury started the week at 4.30%, rose to 4.34% and finished the week at around 4.32%. The yield on 2y Treasury started the week at 4.% and reached the high of 4.03%. Spread between 2y and 10y Treasuries started the week at 31bp and finished the week at 29bp as curve flattened. FedWatchTool sees the probability of a 25bp rate cut at March meeting at around 3%, while probability of a no cut is around 97%. June is the first meeting that sees above 50% probability of a rate cut. The index following "Magnificent Seven" tech stocks—Apple, Microsoft, Alphabet, Amazon, Meta, Nvidia, and Tesla—plunged into a bear market, falling more than 20% from its highs. Gold has reached the $3000 level.

This week we will have retail sales data and Fed meeting. No change in rate is expected but we will get new SEP and dot-plot which will give us more insight in how Fed sees the economy.

Important news for USD:

Monday:​

• Retail Sales​

Wednesday:​

• Fed Interest Rate Decision​

EUR

Deadline for new stimulus package and debt brake to be voted in Germany is March 25. The inaugural session of the newly elected parliament is set for that date. CDU/CSU and SDP do not have necessary two thirds of new parliament, therefore they are trying to implement them while old parliament is still in session. There was already a push back from Green party stating that they will not support it as it is but that they are willing to work to find a deal. Green party wishes for defense spending proposal to be done with the old parliament while infrastructure spending should be done with the new parliament. On Friday report came out that the deal has been agreed upon.. Incoming Chancellor Merz stated that out of €500bn planned over 12 years €100bn will be spent by states with €100bn will be directed toward Climate and Transformation Fund. EU has announced €26bn in retaliatory tariffs on imports from the US. ECB policymaker and Bundesbank president Nagel warned that US tariffs could push Germany into recession this year.

GBP

UK started the year on a weak footing as GDP for January came in at -0.1% m/m vs 0.1% m/m as expected. Digging into the details we can see that weakness was concentrated in manufacturing and industrial output while services printed 0.1% m/m increase in line with expectations. ONS notes that strong sales in food and drink categories helped services print a positive number. Construction output continued to decline but number came in as expected.

This week we will have BoE meeting. No change in rate is expected, as one cut per quarter still remains as the main idea, but any hints regarding future rate cuts path will be carefully watched.

Important news for GBP:

Thursday:​

• BoE Interest Rate Decision​

AUD

February inflation data from China showed plunge back into deflation with a -0.7% y/y print. China’s statistics office stated that deflation is caused by base effects, holidays (Chinese New Year) and weather. It looks increasingly that CPI will return into positive territory in March. PPI improved a bit as it printed -2.2% y/y, a tick up from -2.3% y/y in January.

This week we will have employment data from Australia as well as industrial production and retail sales from China.​

Important news for AUD:

Monday:​

• Industrial Production (China)​
• Retail Sales (China)​

Thursday:​

• Employment Change​
• Unemployment Rate​

NZD

Electronic card data, encompassing almost 70% of total retail sales, for the month of February increased 0.3% m/m and dropped 4.2% y/y. Kiwi has been stuck in a range for the week, ending it on a top of the range against USD, but breaking it against CHF.

CAD

Mark Carney is the new Prime Minister of Canada. Former BoC and BoE governor has won majority of votes in party leadership and is now the new leader of Liberal Party after former Prime Minister Trudeau resigned. He is expected to call for new elections.

BoC has lowered rate by 25bp as was widely expected and brought it down to 2.75. They have cut its rate by 225bp since last June. The statement shows that Canada started 2025 on a solid foot but uncertainty surrounding tariffs will likely slow down the economy as “Recent surveys suggest a sharp drop in consumer confidence and a slowdown in business spending as companies postpone or cancel investments.” Inflation remains close to 2% but is expected to increase in March due to end of the tax break. Governing Council will remain vigilant to downward pressures on inflation from weaker economy and upward pressures on inflation from higher costs while also monitoring inflation expectations.

BoC governor Macklem concentrated on tariffs during his press conference. He stated that tariffs will weaken the economy and there is a need to do as much as possible to adjust to their effects. Tariffs are main concern for Canadian economy as almost 76% of Canadian exports go to the US which equates to around 20% of GDP. This data just emphasizes concern about devastating impact potential tariffs could have on the economy. Canada is planing to announce almost CAD30bn in retaliatory tariffs against the US.

This week we will have inflation data expected to go back above 2%.

Important news for CAD:

Tuesday:​

• CPI​

JPY

Labour cash earnings continued to grow in the month of January as they printed an increase of 2.8% y/y in nominal wages. However, when taking inflation into account, real wages plunged -1.8% y/y after being positive in December. Household spending dropped 4.5% m/m and saw increase of 0.8% y/y. The yield on a 10y JGB rose to 1.56%. Toyota, Nissan and Honda all granted their workers increases in line with union’s demands with other major corporations following suite. Rengo, Japan’s largest union, secured first-round wage hikes of 5.46% which comes after 5.10% increase seen previous year.

Final Q4 GDP was revised lower to 0.6% q/q and 2.2% annualized from 0.7% q/q and 2.8% annualized as preliminary reported. Last week’s data showing slowdown in capex in Q4 was the harbinger of downward revision. The deflator was revised up though to 2.9% y/y from 2.8% y/y as preliminary reported showing even stronger inflation pressures hitting the economy.

This week we will have BoJ meeting. Markets are pricing no change in rate with a small chance of surprise rate hike.

Important news for JPY:

Wednesday:​

• BoJ Interest Rate Decision​

CHF

SNB total sight deposits for the week ending March 7 came in at CHF444.1bn vs CHF437.4bn the previous week. The range is narrowing and movements lack direction as SNB lets market dictate Swissy’s strength.

This week we will have SNB meeting where yet another 25bp rate cut, sixth in a year, is expected.

Important news for CHF:

Thursday:​

• SNB Interest Rate Decision​

 

[katetrades]

Forex Major Currencies Outlook (Mar 24 – Mar 28)

Inflation data from the US and the UK coupled with preliminary PMI data from the Eurozone and the UK will highlight the week ahead of us. Please be mindful that this is the last trading week of Q1 so volatility can be increased due to rebalancing.

USD

OECD has cut global growth for 2025 and 2026 citing tariffs as the main culprit. Global GDP growth is seen at 3.1%, for 2025 and 3% for 2026, down from 3.3%, for both years, seen in December. US GDP has been revised to 2.2% in 2025 and 1.6% in 2026 from 2.4% and 2.1% respectively. Canada and Mexico saw their GDP numbers plunge with former printing 0.7% growth in both 2025 and 2026 (2% was seen previously for both years) while latter will see its GDP shrink 1.2% in 2025 and 0.6% in 2026.

February retail sales showed rare miss on expectations in headline number (0.2% m/m vs 0.6% m/m as expected) but the real star of the show was control group. The control group measure jumped 1% m/m after dropping by the same amount in January. Control group excludes volatile components and is considered a better measure of consumption in the economy, as such it is used for GDP calculation. Ex autos and ex autos and gas categories also rose on the month with 0.3% m/m and 0.5% m/m increased respectively. The biggest contributor were nonstore retailers (online) with 2.4% m/m increase followed by health & personal care stores with 1.7% m/m. Department stores, food services & drinking places as well as gasoline stores all recorded drops bigger than 1% m/m.

Fed has left key interest rate unchanged at 4.25-4.50% range as was widely expected. They see economy continue to expand at a solid pace with labour market staying solid. Inflation is coming down but remains somewhat elevated. Starting in April the pace of QT will be slowed down "the Committee will slow the pace of decline of its securities holdings by reducing the monthly redemption cap on Treasury securities from $25 billion to $5 billion." Governor Waller dissented as he wished to continue the same pace of run off. New dot plot showed no changes to interest rates as they remain at 3.9% for the end of 2025, 3.4% for the end of 2026 and 3.1% for the end of 2027. Longer-term rate was also left unchanged at 3%. GDP projections have been lowered to 1.7% in 2025 and 1.8% in 2026 from 2.1% and 2% seen in December dot plot. The unemployment rate for 2025 has been lifted to 4.4% form 4.3% seen in December. Inflation numbers were also lifted up and now PCE is expected to end at 2.7% for 2025 vs 2.5% in December while core PCE is seen at 2.8% vs 2.5% at their previous projection in December.

At the press conference Chairman Powell was persistently asked about impact of tariffs on inflation and he characterized it as “transitory”. This is a loaded word as it reminds people of central banks incompetence to properly grasp inflation threat during the pandemic, when they also labelled it as transitory. He dismissed the weakness seen in consumer sentiment and increase seen in consumer inflation expectations. He also emphasized importance of hard data and currently it is giving Fed room to wait with rate cuts. Powell acknowledged apparent moderation in consumer spending but added that wages are growing faster than inflation. Labor is not a source of serious inflation pressures and inflation is expected to reach a 2% target in 2027. Trade, immigration and fiscal policy will see changed by new administration. Uncertainty is unusually elevated and Powell stated that changes in SEP are largely due to trade policy.

The yield on a 10y Treasury started the week at 4.32%, rose to 4.32% and finished the week at around 4.25%. The yield on 2y Treasury started the week at 4.03% and reached the high of 4.04%. Spread between 2y and 10y Treasuries started the week at 33bp and finished the week at 31bp as curve proceeded to flatten. FedWatchTool sees the probability of a 25bp rate cut at May meeting at around 17%, while probability of a no cut is around 83%. June is the first meeting that sees above 50% probability of a rate cut. Gold has settled comfortably above the $3000 level.

This week we will have final reading of Q4 GDP as well as Fed’s preferred inflation measure PCE.

Important news for USD:

Thursday:​

• GDP​

Friday:​

• PCE​

EUR

German parliament voted with a 513 votes majority to implement fiscal stimulus and change to the debt brake. The package is for €500bn infrastructure fund over the next 12 years of which €100bn will be directed towards the Climate Transition Fund, that is what Greens pushed for in exchange for their votes in the parliament, while €300bn will be used by federal government and €by state governments. Defense spending of more than 1% of GDP will be exempted from the debt brake and state governments will be allowed to run annual deficits of up to 0.35% of GDP. Bundesrat, the upper house of parliament, has passed the debt reform.

Final February CPI showed 2.3% y/y increase in prices, a tick down from 2.4% y/y as preliminary reported with a 0.4% m/m increase instead of 0.5% m/m as preliminary reported. ECB president Lagarde stated that if US would impose 25% tariffs on imports from the EU it would result with Eurozone GDP decline of 0.3% in the first year and 0.5% if EU imposes retaliatory measures.​

This week we will have preliminary PMI data for the month of March.

Important news for EUR:

Monday:​

• S&P Manufacturing PMI (Eurozone, Germany, France)​
• S&P Services PMI (Eurozone, Germany, France)​
• S&P Composite PMI (Eurozone, Germany, France)​

GBP

Payrolls change for February saw economy add 21k jobs. January ILO unemployment rate stayed unchanged at 4.4%. Average weekly earnings rose 5.8% 3m/y vs 5.9% 3m/y as expected with ex bonus category staying at 5.9% 3m/y as was in December. ONS has provided the usual caveat about the quality of data but BoE will remain concerned with such a strong wage growth and its potential impact on inflation pressures.

BoE has left the bank rate unchanged at 4.50% as widely expected but there were interesting changes. First, the vote was 8-1 in favour of no change (Dhingra voted for a 25bp rate cut) vs 7-2 as markets were expecting with some even seeing potential for a 6-3 vote. Second, there was a sentence in the statement saying “A gradual and careful approach to the further withdrawal of monetary policy restraint is appropriate”. This sentence indicates possibility that we will get less than one cut per quarter, which is currently priced in by markets, which in turn should lead to GBP strength. They have noted substantial progress on disinflation and emphasized increased uncertainties due to global trade policy, tariffs. If inflation pressures are pushed down it would warrant a less restrictive path of bank rate.

This week we will have preliminary March PMI data as well as February inflation data which will be followed closely now that BoE has shifted its focus back on inflation.

Important news for GBP:

Monday:​

• S&P Manufacturing PMI​
• S&P Services PMI​
• S&P Composite PMI​

Wednesday:​

• CPI​

AUD

February employment report was an ugly one. Employment change saw economy losing 52.8k jobs while expectations were for economy to add 30k jobs making it a miss of over 80k jobs. This is the first drop in employment since March of 2024. Looking into the details we see the unemployment rate remaining at 4.1% but only due to a plunge in participation rate to 66.8% from 67.2% in January. Full-time jobs saw a loss of 35.7k while part-time jobs declined by 17.1k. Additionally, previous month’s numbers were revised down and such an ugly report will nudge RBA towards rate cuts and AUD is feeling the pressure.

Data from China for the January-February period saw retail sales print 4% y/y as expected, up from 3.7% y/y in December. Communication appliances led the growth with a staggering 26.2% y/y followed by sports and recreation with 25% y/y while auto sales were down 4.4% y/y. Industrial production came in at 5.9% y/y vs 5.3% y/y as expected and down from 6.2% y/y seen in December. The rail, ships, and aeroplane category led the way with 20.8% with the auto sector growing of 12%. Industrial robots and service robots showed biggest increases in terms of products.

Over the weekend State Council of China published a 30 point plan on how to boost consumption. Boosting consumption was given top priority at last week’s Two Sessions. The main focus will be on increasing capacity and willingness of households to consume. The plan includes steps to improve minimum wage and jobs market as well as support the stock market. In order to improve willingness to spend the plan says it will take measures to increase pensions and improve health insurance. Bonds in the amount of CNY300bn will be issued to help spur consumption, specifically for automobiles, home appliances and electronics.

NZD

Q4 GDP showed growth of 0.7% q/q s 0.3% q/q as expected. The economy returns to growth after declining for past two quarters. GDP continues to shrink on y/y basis as it printed a -1.1%. Current account deficit for the final quarter of 2024 increased by more than expected.

CAD

February inflation data saw headline number jump to 2.6% y/y from 1.9% y/y in January while a 2.2% y/y print was expected. CPI rose 1.1% m/m. All three of core measures increased with median and trim printing 2.9% y/y while common printed 2.5% y/y increase in prices. With tariff threats looming inflation data has taken the backseat. BoC stated previous week that they are focused on keeping price stability but they put tariff risk at the forefront of their concerns.

BoC governor Macklem stated that the main goal in setting monetary policy is to minimize the risk of errors which will mean being less forward-looking than normal but it also means acting quicker when data show greater clarity. He emphasized the potential threat of tariffs on inflation and added that the greater the threat the more focus will have to be on anchoring inflation expectations. Macklem stated that February data fundamentally changed bank’s view and reiterated their commitment to controlling inflation. BoC seems to move to the pause for now as they assess impact of tariffs but they will be ready to act faster than usual in any direction as needed. Prime Minister Carney scheduled elections for April 28.

JPY

BoJ left short-term policy rate unchanged at 0.5% as was widely expected. Accompanying statement showed that economy is recovering moderately while consumer spending is increasing at a moderate pace. Inflation expectations are showing gradual increase while “Underlying inflation expected to align with the BoJ’s price target in the latter half of the three-year outlook period.“ Economy is expected to continue growing above potential. Uncertainty around economic and price outlook remains high with trade tensions the biggest worrying factor.

Governor Ueda stated at the press conference that wage growth from spring negotiations were was in line with their January view then adding that wage growth is on track or maybe even stronger than anticipated. Neutral rate remains unknown and it is hard to tell how tariffs will impact the economy in the short-term. BoJ will watch tariff developments, remain data-dependent and committed to policy normalization. There was no push for faster rate hikes or much hawkish tones in statement and in his remarks but the door for potential rate hike in May has been left open.

February national CPI slowed down to 3.7% y/y from 4.% y/y in January due to renewed government energy subsidies and decline in fresh food prices. Markets were expecting a 3.5% y/y print so this still shows stronger inflation pressures. Additionally, CPI ex fresh food and energy, so-called “core-core” and the one that BoJ closely follows, ticked up to 2.6% y/y from 2.5% y/y the previous month. Domestic services are keeping prices elevated. Rengo, Japanese largest trade union, announced that in second-round data they see an average wage increase of 5.40%. This would mark it a second year of above 5% wage increases and will keep inflation pressures on. Inflation report combined with wage data should give more credence to BoJ rate hike in May.

CHF

SNB total sight deposits for the week ending March 14 came in at CHF448.5bn vs CHF444.1bn the previous week. Deposits are moving from the lower bound as uncertainties around world make Swissy look attractive to some investors. Swiss government has lowered GDP forecasts for 2025 to 1.4% and for 2026 to 1.6% from 1.5% and 1.7% as seen previously. CPI fr 2025 was left unchanged at 0.3% while 2026 CPI was lowered to 0.6% from 0.7% previously. Global trade uncertainty caused by tariffs was the main reason for the downgrade.

SNB has cut interest rate to 0.25% as was widely expected. They have reiterated their willingness to act in FX market if necessary. Emphasis was put on uncertainties troubling global and Swiss economic growth. Inflation trajectory is moving in line with expectations and it is expected to further ease gradually in the coming quarters. New projections see CPI around 0.3% in Q2 and 0.4% for 2025, previous projection was for 1.1% CPI in 2025, with average inflation increasing to 0.8% in 2026 and 2027. GDP was unchanged and it is still seen in the range of 1-1.5% in 2025. Governor Schlegel stated that monetary conditions are now appropriate and that probability of further easing is low.​

 

[katetrades]

Forex Major Currencies Outlook (Mar 31 – Apr 4)

April 2 is the main day, the so-called Liberation Day, where new and reciprocal tariffs will be applied. In addition, we will have NFP, ISM PMI, inflation data from from the Eurozone an Switzerland, PMI data from China and employment data from Canada will highlight the week ahead of us.

USD

The week started with new talks about tariff adjustments. Now instead of targeting entire industries tariffs will be targeted towards countries with significant trade surplus with the US. Exemptions for autos, pharma and chip makers are expected. On Wednesday President Trump announced 25% tariffs on all cars and light trucks made outside of the US. This tariff will also take place on April 2, “Liberation Day”, they will be added on top of other tariffs and will remain in place throughout his mandate. Mexico. Japan, Germany and Canada will be hit the hardest by these new tariffs. Trump has also announced a one month tariff exemption for auto-parts that will last until May 3.

Headline PCE for the month of February was unchanged at 2.5% y/y with a 0.3% m/m print (0.340% vs 0.325% the previous month). Core PCE ticked up to 2.8% y/y from 2.7% y/y in January with a 0.4% m/m vs 0.3% m/m as expected print (0.380% vs 0.285% the previous month). There was almost a full percentage increase in m/m core reading and with it being more than double the necessary 0.17% m/m for a 2% annualized reading it is hard to see chances for a rate cut increasing. Personal income came in at 0.8% m/m vs 0.4% m/m as expected with personal spending increasing 0.4% m/m vs 0.5% m/m as expected, both were higher than in January. Final Q4 GDP reading was revised up to 2.4% from 2.3% annualized in previous readings. Private consumption was revised down while net exports and government consumption were revised up. Atlanta Fed GDP tracker now sees Q1 GDP at -2.8%, down from -1.8% previously.

The yield on a 10y Treasury started the week at 4.26%, rose to 4.40% and finished the week at around 4.27%. The yield on 2y Treasury started the week at 3.97% and reached the high of 4.06%. Spread between 2y and 10y Treasuries started the week at 30bp and finished the week at 38bp as curve returned to bear steepening. FedWatchTool sees the probability of a 25bp rate cut at May meeting at around 10%, while probability of a no cut is around 90%. June is the first meeting that sees above 50% probability of a rate cut. Gold has settled comfortably above the $3000 level reaching a new high of $3085.

This week we will have ISM PMI data for the month of March, tariff day on April 2 and NFP data on Friday. Headline number is projected to be at 128k with the unemployment rate remaining at 4.1%.

Tuesday:

• ISM Manufacturing PMI​

Wednesday:​

• “Liberation Day”​

Thursday:​

• ISM Services PMI​

Friday:​

• NFP​
• Unemployment Rate​

EUR

Preliminary March PMI data saw manufacturing PMI rise to 48.7 from 47.6 in February. Manufacturing PMI surge due to front running the threat of tariffs. It is also buoyed by the infrastructure stimulus from Germany with both France and Germany printing big jumps and getting closer to expansion territory. New orders are still contracting, but at a slower pace while export orders could remain under pressure given the trade war and weaker global demand. The report states that manufacturers expanded their output for the first time in two years. Services ticked down to 50.4 from 50.6 the previous month. Domestic demand is more important for services sector than tariff threat and if this is a sign that consumer is stumbling it could be worrisome. Composite was propelled to 50.4 by strong manufacturing readings.

Preliminary CPI data for March showed French reading unchanged at 0.8% y/y while markets were expecting a 0.9% y/y print. Spanish reading dropped to 2.3% y/y from 3% y/y in February, more than 2.4% y/y expected. ECB survey of inflation expectations showed no change in the next twelve months and three years. In combination with softer preliminary prints this will increase chances of another rate cut in April.

This week we will have preliminary inflation reading expected to tick down further and add more credence to the April rate cut talk.

Important news for EUR:

Tuesday:​

• CPI​

GBP

The division between two sectors in the UK economy has deepened further as shown by the preliminary PMI readings for the month of March. Manufacturing PMI declined to 44.6 from 46.4 in February which is new 18-month low while services jumped to 53.2 from 50.9 the previous month, a new six-month high. Composite was lifted by services and printed 52 from 50.5 seen in February.

BoE Governor Bailey stated that raising potential growth of the economy proves to be a challenging task. He emphasized importance of AI and general-purpose tech as well as skilled labor. Additionally, signs appear that businesses delay investments to due to uncertainties surrounding global trade.

February inflation data surprised to the downside with headline number printing 2.8% y/y after a 3% y/y print seen in January. Core reading dropped to 3.5% y/y from 3.7% y/y the previous month while markets were expecting a 3.6% y/y print. Digging into the details we see that the drop was caused by drop in prices of goods while services inflation remains at a very high level of 5%. The report shows both encouraging and worrying signs and it is not sure to move BoE towards further rate cuts.

Chancellor of the Exchequer Reeves unveiled Spring statement which showed that GDP is expected to be around 1% in 2025 and average around 1.75% over the rest of the decade. The statement shows further spending as cuts to welfare budget and government spending will come in effect in four years’ time. The debt issuance for the next twelve months has not been changed and stays at £300bn.

AUDFederal budget announcement saw GDP for 2026 at 2.25% and 2.5% for 2027. Tax cuts were also announced such as the tax rate for the $18,201 to $45,000 threshold will be reduced to 15% from 16% from July 1 2026 with additional cut to 14% from July 1 2027. This is seen as a political move to gather support for the second term of current Prime Minister Albanese. February CPI reading ticked down to 2.4% y/y from 2.5% y/y as seen in January. Although monthly reading does not encompass full scope of inflation seeing it go down will be welcomed by the RBA.

This week we will have RBA meeting where no change is expected. Additionally, we will get official March PMI data from China.

Important news for AUD:

Monday:​

• Manufacturing PMI (China)​
• Services PMI (China)​
• Composite PMI (China)​

Tuesday:​

• RBA Interest Rate Decision​

NZD

Consumer confidence for the month of March continued to deteriorate and printed 93.2 vs 96.6 in February. Kiwi was stuck in the range for most of the week as markets were unwilling to push it either way due to quarter end rebalancing flows and incoming tariffs.

CAD

Canada started the year on a strong footing with GDP increasing 0.4% m/m vs 0.3% m/m as expected. Increases were broad based as 13 out of 20 sectors saw improvements. The increase was led by goods producing industries while services rose modestly. Advanced February reading sees GDP coming in flat. Tariff concerns are the main driver of CAD so April 2 is critical for future of the economy.​

This week we will have employment data.

Important news for CAD:

Friday:​

• Employment Change​
• Unemployment Rate​

JPY

Preliminary March PMI data showed all three numbers printing below 50. For services and composite this is the first drop into contraction since October. Manufacturing came in at 48.3, down from 49 in February as output and new orders showed stronger declines. Positives can be seen in growing new export orders and employment while both input and output prices declined. Services dropped to 49.5 from 53.7 the previous month and dragged composite with them to 48.5 from 52 in February. Services sector recorded outright decline in output while new orders, new export orders and employment showed weaker growth. Output prices showed weaker inflation while input prices showed stronger inflation due to rising wages. Services showed weaker positive outlook while manufacturing showed stronger positive outlook.

Minutes from the last week#s BoJ meeting showed members getting increasingly confident that underlying inflation will reach 2% target. Additionally, some members feel that even when rates get increased real rates will still stay deep in negative territory due to high inflation. There were no hints on future path of monetary policy. Yield on 10y JGB reached a new high of 1.58%.

Governor Ueda had some comments during the week that negatively impacted JPY. He stated that cost-push inflation will likely dissipate in time and that if the food price increases prove to be only temporary then BoJ should not respond using monetary policy tools. He clarified that if increase in food prices proves to be sustained and pushes up services prices as a result then it could lead to wide-range inflation which will warrant further rate hikes.

March inflation data for the Tokyo area saw all three measures come hotter than expected and all three print above BoJ’s 2% target. Headline number came in at 2.9% y/y vs 2.8% y/y the previous month while markets were expecting a slowdown to 2.7% y/y. Ex fresh food component printed 2.4% y/y vs 2.2% y/y as expected and in February while ex fresh food, energy component printed 2.2% y/y vs 2% y/y as expected and up from 1.9% y/y the previous month. Governor Ueda is unwilling to commit to rate hikes until he has more information about tariff developments but this hot inflation print increases chances of a May hike.

CHF

SNB total sight deposits for the week ending March 21 came in at CHF440.4bn vs CHF440.7bn the previous week. Virtually no change as SNB lets market dictate Swissy’ strength.

This week we will have inflation data.

Important news for CHF:

Thursday:​

• CPI​