The EURUSD is lower after weaker German jobs picture and lower inflation in France. The GBPUSD is also lower anc cracking below its 100 hour MA again, ahead of the US PCE data at 8:30 AM ET. The USDJPY fell lower to MA support but is bouncing off the MA. The price is still lower on the day after the rise yesterday saw the pair extend just short of the 38.2% retracement target.
IN the video above, I talk to the technicals driving the 3 major currency pairs to start the US session and ahead of the key US PCE data.
As the US session begins, the major US stock indices are lower for the third consecutive day. For the week coming into today, the S&P was still up 0.45%. The NASDAQ index is up 0.11%, and the Dow industrial average is up 0.75%
US yields are also lower after seeing rises this week. The 10 year yield is up 7.6 basis points, while the two year is up 2.4 basis points.
US PCE data will be released at 8:30 AM ET with expectations of 0.3% for both the headline and the core measures. For the urine year, the core is expected to rise by 2.7% while the headline is expected to rise by 2.5%. The US PCE is the favored measure of inflation for the Federal Reserve.
US personal income and consumption will also be released at 8:30 AM ET with income expected to rise by 0.4% versus 0.9% last month. Consumption is expected to rise by 0.5% versus -0.2 last month.
At 10 AM, ET, University of Michigan sentiment final will be released with expectations of 57.9 versus 64.7 last month and preliminary 57.9.. 1-year Inflation came in at 4.9% in the preliminary while the five-year was at 3.9% both up sharply for the last few months.
Canada GDP will be released at 8:30 AM with expectations of 0.3% versus 0.2% last month
In Germany today, Germany’s labor market showed further signs of weakness in March, with unemployment rising by 26,000—well above the expected 10,000 increase and up from 5,000 in the prior month (highest since October when it rose 27K). The jobless rate also edged higher to 6.3%, slightly above the forecast of 6.2%, marking its highest level since September 2020. The data continues to reflect a softening trend in the labor market.
France’s preliminary March CPI rose 0.8% year-over-year, matching the prior month but slightly below the expected 0.9%. The EU-harmonized HICP came in at 0.9%, also below the 1.1% forecast. The data points to softer-than-expected inflation, adding to signs of easing price pressures in the French economy.
Spain’s preliminary March CPI rose 2.3% year-over-year, slightly below the 2.4% forecast and down from 3.0% in February. The EU-harmonized HICP fell to 2.2%, below the expected 2.6%, while core inflation eased to 2.0% from 2.2%. The data signals continued disinflation, offering reassurance to the ECB despite Spain’s slower pace compared to France and Italy.
Markets increased their bets on ECB rate cuts after softer-than-expected inflation data from France and Spain, raising expected easing by year-end from 56 bps to 60 bps. Traders now see a 90% chance of a rate cut at the ECB’s next meeting. Comparatively, the Fed is priced for 64 bps of cuts (85% probability of no change in the next meeting), while the BoE is expected to cut 45 bps (56% probability of a cut). Other central banks show mixed expectations: BoC (48 bps, 62% no change), RBA (66 bps, 86% no change), RBNZ (60 bps, 70% cut), and SNB (12 bps, 75% no change). The BoJ remains the lone major central bank expected to hike, with 33 bps priced in and a 73% chance of no change at the next meeting.
ECB Vice President Luis de Guindos emphasized the need for caution during uncertain times, noting that the disinflation process is continuing and the target should be reached in the coming months. He warned that a trade war would primarily impact economic growth, with any inflationary effects likely to be offset over the medium term due to slower growth. While his comments could be interpreted as hinting at a potential pause, he also highlighted the ongoing progress on disinflation. Markets are currently pricing in around an 80% chance of a rate cut in April, but much will depend on how strongly the ECB pushes back after April 2.
In geopolitical news, Israeli drones carried out a limited strike on buildings in Beirut as an apparent warning shot. France’s Macron says that Israel strike violates the cease-fire agreement.
Looking at US stock futures the prices are implying a mixed lower en:
- Dow industrial average -27.70 point
- S&P index minus -6.3 points
- NASDAQ index -44.62 points
In the US debt market, the US treasury yields are higher
- 2 year yield 3.9776%, -2.0 basis points
- 5-year yield 4.059%, -4.0 basis points
- 10 year yield 4.320%, -4.8 basis points
- 30 year yield 4.676%, -5.3 basis points
In other markets to start the US trading day:
- Crude oil is trading unchanged at $69.91
- Spot gold is trading up $15.46 or 0.60% at $3073.84. A new all-time high was reached today at $3086.04
- Silver is trading up $0.04 or 0.01% at $34.41. A close this level would be the highest close going back to 2012
- Bitcoin is trading lower by $2053 at $85,166.
