More market panic on Friday with stocks continuing to fall and markets seeking safety into JPY and CHF. GBPAUD and GBPNZD soared to a 10-year high as another sign of market panic, while China chimed-in with talk of retaliation.
Jerome Powell spoke in the afternoon with a more hawkish tone on inflation and rates, commenting that the tariffs are larger than expected, and that their inflation impact “could be more persistent”. This marked a shift from his earlier stance, when he had described tariff-induced inflation as transitory.
Friday's nonfarm payroll numbers came in higher than expected yet the unemployment rate ticked only marginally higher to 4.2%
*Daily move - against G10 rates at 7:30am, 07.04.25
** Indicative rates - interbank rates at 7:30am, 07.04.25
Today's open isn't much prettier as Friday's moves continue - stronger JPY and CHF and weaker AUD and NZD. Despite Powell's hawkish comments on Friday, the fear of an impending recession is seeing markets now price-in five rate cuts by the Fed this year as the administration remained defiant on the Trump's tariffs.
This week's main data points will be in the form of inflation numbers stateside with CPI numbers on Thursday and PPI numbers on Friday. This will be the first hint of the inflationary impacts on the tariffs imposed on Canada, Mexico and China. If there is an uptick, we are likely to see it in the PPI numbers due to links to commodity prices.
Here in Europe, the economic calendar is looking very light with only February's UK GDP number due out on Friday. Growth is expected to be 0.1% higher following a contraction of 0.1% in January.
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