Eurozone Inflation, U.S. PMI in Focus to Start Q2
Markets open Q2 with a packed calendar, led by Eurozone inflation data and U.S. manufacturing indicators. March preliminary CPI from the euro area is expected to confirm continued disinflation, with the core Harmonized Index of Consumer Prices (HICP) YoY seen easing to 2.5% from 2.6%. In the U.S., the ISM Manufacturing PMI is projected to remain just below expansion at 49.5, while Fed speakers and JOLTS job openings round out the day. Meanwhile, gold continues its record run, and oil extends its rebound on tightening supply expectations.
Key Data Ahead Today – Tuesday, April 1
- Eurozone CPI (March, Prelim):
- Core HICP YoY: Expected at 2.5% vs 2.6% prior.
- Headline HICP YoY: Forecast to drop to 2.2% from 2.3%.
Signs of further disinflation would strengthen expectations for ECB rate cuts later in the year.
- ISM Manufacturing PMI (March):
- Seen at 49.5, up slightly from 50.3 in February.
Sub-indexes like employment, prices paid, and new orders will give deeper insight into demand conditions and hiring strength.
- Seen at 49.5, up slightly from 50.3 in February.
- JOLTS Job Openings (Feb):
- Expected to show a slight dip from 7.63M to 7.74M, providing another read on labor market tightness.
- Central Bank Speakers:
ECB President Christine Lagarde speaks at 12:30 GMT, followed by multiple appearances from ECB and Fed officials including Barkin and Lane. Markets will listen for clues on policy direction as inflation trends lower on both sides of the Atlantic.
Commodities
- Gold: Rallying further to $3,141.14 (+0.66%), up nearly 20% YTD. Support continues to come from declining real yields, a weaker dollar trend, and central bank accumulation. Quarter-end flows and risk hedging are also playing a role.
- Silver: Slightly softer at $34.03 (-0.02%), but remains up 7.5% this month. Still benefiting from the same drivers as gold, plus industrial demand expectations.
- Oil: WTI is trading at $71.67 (+0.27%) and Brent at $74.90 (+0.17%). Prices are up over 4% in March, supported by OPEC+ supply discipline and geopolitical risks. Oil remains lower YoY, but sentiment has shifted more bullish into Q2.
Currency Movements
- EUR/USD at 1.0815 (-0.01%): Little changed ahead of CPI and Lagarde’s remarks. The euro is holding firm as markets await confirmation of inflation’s downtrend.
- GBP/USD at 1.2924 (+0.05%): Sterling is stable as attention shifts to BoE commentary and UK growth data later this week.
- AUD/USD at 0.6258 (+0.16%) and NZD/USD at 0.5676 (+0.11%): Both slightly firmer after a soft end to Q1. Risk sentiment and commodity prices remain key drivers.
- USD/JPY at 149.85 (-0.07%): Yen trades in a tight range. Markets still expect BoJ normalization, but timing remains uncertain.
- USD/CNY at 7.2780 (+0.16%): Yuan under modest pressure amid persistent concerns about Chinese growth and limited PBoC action so far.
- USD/CHF at 0.8832 (-0.14%): Franc stronger on risk-off flows and haven demand.
- USD/CAD at 1.4386 (-0.01%): CAD remains rangebound, lacking clear drivers despite oil gains.
- USD/MXN at 20.49 (+0.10%): Peso under light pressure amid quarter-end position adjustments.
- USD/INR at 85.52 (+0.10%): Rupee little changed. India continues to benefit from strong equity inflows and solid fundamentals.
Market Outlook
Today marks a pivotal start to Q2 with inflation and growth data on both sides of the Atlantic in focus. A softer Eurozone CPI print could increase pressure on the ECB to shift dovish, while a weak U.S. PMI might amplify concerns around a manufacturing slowdown. Gold’s surge and oil’s steady grind higher suggest investors remain cautious, but not bearish.
With numerous central bank speeches ahead and heavy data flow this week, traders are positioning for more volatility. Expect price action today to hinge on inflation direction, employment trends, and how policymakers respond.