Week of March 31

Last week, some positive indicators in the US, such as durable goods orders and final GDP figures, while flash European CPI and UK indicators also showed optimistic results.

The upcoming week promises to be busier, with key events like the RBA rate decision, inflation figures from the Euro Area, and the highly anticipated NFP.

Week in Review

Despite some positive economic data from the US, such as higher-than-expected durable goods orders at +0.9% (versus the projected -1%) and a slightly upward revised final Q4 GDP reading of 2.4% (from the preliminary 2.3%), tariff concerns resurfaced, overshadowing upbeat indicators and allowing safe-haven flows to dominate. Major US indices were mixed.

In the UK, Chancellor Rachel Reeves announced the Spring Budget, with no further tax hikes and a largely reiterated set of prior spending announcements. The UK's OBR halved its GDP growth outlook for the year to 1% and raised its estimates for this year's inflation to 3.2% from 2.6%. Meanwhile, UK inflation fell to 2.8% unexpectedly, versus an expected unchanged figure at 3%, while the core rate came in at 3.5% as expected. British retail sales jumped in February, with annual growth of 2.2% instead of the projected 0.6%. Cable gained during the week but remained in a range between 1.2865 and 1.30.

Australian inflation came in slightly below expectations at 2.4% compared to the 2.5% forecast, with Australian Treasurer Jim Chalmers maintaining the growth forecast for the nation's economy.

German flash PMIs rose more than expected but remained in contraction, while the measure for the UK came in largely as expected.

French preliminary March inflation was slower than anticipated, staying at 0.8% instead of the projected 1%.

In geopolitics, Trump made a series of additional tariff announcements, including a new 25% levy on foreign-made cars, which will take effect on April 2. Australia's Prime Minister Anthony Albanese called for general elections on May 3.

Biggest Market Movers

• Copper prices hit an all-time high following Trump’s tariff threats and stimulus from China, but they recoiled during the second half of the week.
• The yen weakened above 150 vs the USD after BOJ Governor Kazuo Ueda ruled out selling JGBs in the short term.
• The latest salvo in the trade war pushed gold to a new all-time high, nearing the $3,100 level after four weeks in the green.

Week Ahead

The highlight of the coming week will likely be towards the end with the release of the Non-Farm Payrolls, as investors are looking for signs of whether the US economy will maintain a growth trajectory in the tariff environment.

All Eyes on NFP, Economic Resilience

With the unemployment rate expected to remain unchanged at 4.1%, it could keep the Fed from easing, as it implies continued tightness in the labour market. However, the payroll numbers are expected to fall to 80K from 151K prior, with the recent DOGE-driven cuts in the government workforce expected to show up. Gold could break towards $3150 or slide back to the $3000 handle.

Meanwhile, the US trade deficit is expected to expand once again, driven by importers looking to get ahead of tariffs.

On the topic of economic resilience, markets will be looking at China's PMI figures, which are expected to advance further into expansion as stimulus from the government outweighs the impact of tariffs.

RBA Rate Decision in Focus

The RBA is expected to keep rates unchanged, but the market is pricing in a high likelihood of a rate cut at the subsequent meeting. That implies that traders will be focused on the statement to get clues confirming this expectation or whether the central bank disappoints by suggesting rates will remain steady for a while longer. The Aussie dollar tilted slightly higher last week but ended forming an inside bar below 0.63. The next support lies at 0.6210, with resistance at 0.6364.

European Inflation on the Docket

Markets expect that inflation in the Euro Area will decline in March, with the preliminary figure expected to be reported as 2.1% on the headline, down from 2.3% prior. Meanwhile, the core rate is expected to stay unchanged at 2.6%. After France's reading came in below expectations, the market is likely looking for confirmation from the German reading on Monday, which is not expected to rise above last month's 2.3%. EURUSD tested the 50-week support earlier, bringing into focus 1.07, while the 200-week equivalent waits near 1.0850.

Other Events, Earnings

Monday sees the release of retail sales data from Japan and Germany. Tuesday includes Japan's Tankan large manufacturers index as well as the US ISM manufacturing PMI. Thursday features Australia and Canada's trade balances. Canada's jobs data is expected on Friday.

Scheduled earnings are light, with companies avoiding updates for April 1st, but the latter half of the week includes names such as ConAgra, Acuity, Travis Perkins and Sodexo.