The week will begin slowly on Monday, with no significant scheduled economic events for the FX market.
On Tuesday, the highlight will be the RBA monetary policy announcement, along with the final manufacturing PMI for both the eurozone and the U.S. Additionally, the U.S. will release the JOLTS job openings report.
On Wednesday, the U.S. will report the ADP non-farm employment change, but the focus will be on President Trump’s expected tariffs announcements on what he has dubbed as Liberation Day.
Thursday will bring inflation data from Switzerland, while the U.S. will release unemployment claims and the ISM services PMI.
On Friday, the U.S. will release key labor market data, including average hourly earnings m/m, non-farm employment change, and the unemployment rate. In Canada, attention will also turn to the employment change and unemployment rate.
Later in the day, Fed Chair Powell is expected to speak about the economic outlook at the Society for Advancing Business Editing and Writing Annual Conference in Arlington, with audience questions expected. Throughout the week, several FOMC members are also expected to deliver remarks.
At this week’s meeting, the RBA is expected to keep rates on hold. Lately, inflation data has started to cool down, and labor market indicators suggest a balance between demand and supply. Analysts from Westpac argue that the international environment is unlikely to have a significant impact on Australian inflation at this time.
The RBA is not expected to maintain the hawkish tone seen at the last meeting. The market still anticipates further rate cuts, with the next one expected in May.
Inflation data for the eurozone has also started to cool down recently but remains above the ECB’s desired target and is expected to stay elevated for the foreseeable future. The consensus for this week’s data is a headline inflation rate of 2.2% and a core CPI of 2.5%.
In terms of monetary policy, the ECB is expected to continue with at least 2 rate cuts until the end of the year. However, the expected increase in defense spending and the uncertainties surrounding tariffs is likely to make the Bank more cautious.
In the U.S., the consensus for the ISM manufacturing PMI is 49.6, down from the previous 50.3. Expectations suggest the manufacturing sector will slip below 50 into contractionary territory, largely due to new tariffs on steel, aluminum, and non-USMCA-compliant goods, which are expected to put additional pressure on the sector. Delivery times have lengthened, and input costs have risen as manufacturers rush to place orders ahead of potential tariff impacts.
For the ISM services PMI, which will be released on Thursday, the consensus is 53.0, slightly lower than the previous 53.5. This decline suggests a slower pace of expansion in the services sector.
According to analysts from Wells Fargo, the weakening manufacturing activity is expected to put pressure on goods-related service industries, including transportation and wholesale. Furthermore, tariff-related uncertainty may disrupt pricing, forecasting, and purchasing behaviors, potentially inflating artificial demand and leading to a slowdown in future orders.
On Wednesday, the Trump administration is expected to announce global tariffs that would apply to virtually all U.S. trading partners, in addition to those announced for autos last week. Retaliation remains a concern, as some countries, including China, have indicated they will match U.S. tariffs. Meanwhile, the EU is reportedly considering concessions to avoid or reduce tariffs.
In the U.S., the consensus for average hourly earnings m/m is 0.3% vs. 0.3% prior. The non-farm employment change is expected to slow to 139K from the prior 151K, while the unemployment rate is likely to remain steady at 4.1%.
A notable slowdown is anticipated in non-farm employment growth, with analysts attributing much of this weakness to federal employment cuts. According to Wells Fargo, government payrolls are expected to shrink by 15K as hiring freezes and layoffs intensified ahead of the survey period.
The private sector outlook is also concerning. Small business hiring plans have returned to pre-election levels, job postings are declining, and regional Fed surveys indicate a sharp slowdown in service-sector employment. Although initial jobless claims remain stable, the February surge in Challenger job cut announcements, the highest since 2020, suggests businesses are struggling to lower headcounts just through natural employee departures, Wells Fargo said.
However, some factors may help offset these declines. Seasonal hiring in the leisure and hospitality sectors is expected to increase as weather conditions improve, while employment in healthcare and social assistance is likely to remain resilient.
In Canada, the consensus for employment change is 9.9K, up from the previous 1.1K, while the unemployment rate is expected to rise from 6.6% to 6.7%.
While growth in the job market seems to be slowing down, it comes after a 76K surge in January. Job postings on indeed.com in the second half of March suggest a softening in hiring demand according to analysts from RBC.
Labor supply growth is expected to face increasing constraints due to slower population expansion, pointing to a more subdued employment outlook in the coming months.
