Last week was fairly calm on the currency front, despite notable events such as the UK Spring Statement. While the Statement itself didn’t create immediate volatility, it has set the stage for a challenging outlook ahead. Growth forecasts for 2025 have been revised sharply lower, and inflation is predicted to rise again in the medium term. The UK government could face difficult decisions around raising taxes once more, particularly with another tough Autumn Budget expected later this year. As we head into April, we’d hope for brighter weather and clearer trading conditions—though at this point, both remain uncertain.
The main event this week will undoubtedly be President Trump’s reciprocal tariffs, set to take effect on Wednesday, April 2nd. Trump intends to match the tariff rates imposed by countries that levy charges on U.S. exports, creating significant uncertainty for global trade. Markets seem to have priced in these measures already, meaning significant volatility may only emerge if there’s a sudden change in these tariff plans. Either way, traders will need to remain vigilant.
From a data perspective, this week primarily focuses on the U.S., Europe, and Australia. Fortunately for those trading Sterling, a quiet UK data calendar means no news could be good news.
We kick off on Monday with Germany’s Flash CPI, expected to come in lower at 2.2%, which may slightly weaken the Euro. The U.S. releases the MNI Chicago PMI data, expected to fall to 45.0, a potentially negative indicator for the U.S. Dollar.
Tuesday sees the Reserve Bank of Australia’s latest interest rate decision, where rates are forecast to remain unchanged at 4.1%. As no surprises are expected, AUD volatility should remain minimal. Later that morning, Eurozone data includes manufacturing PMI, unemployment figures, and flash CPI. With minimal changes anticipated, EUR movements should also remain muted.
Wednesday, humorously dubbed “Liberation Day” by President Trump, will focus squarely on tariffs. Although the U.S. ADP employment report is due—forecast at 120k, higher than previously—the market’s main attention will undoubtedly remain fixed on tariff developments.
Thursday brings services PMI data from Europe, the UK, and the U.S. Minimal revisions are expected across all regions, although a slight drop in the U.S. number could put some mild pressure on the Dollar. Additionally, ECB minutes from the latest meeting could provide clues on future rate moves, potentially impacting the Euro.
Finally, Friday sees the key monthly release—U.S. Non-Farm Payrolls—anticipated lower at 140k compared to last month’s 151k. Given this report’s history of surprises, caution is advised. Any substantial deviation could drive significant volatility in the Dollar.
With a busy week ahead, especially regarding trade developments and U.S. employment data, careful positioning will be key. If you require assistance with currency strategies or transactions, please feel free to reach out.