Month-end flows and signals that the Trump administration will ease the impact of car tariffs (the executive order was signed last night) supported the dollar yesterday. The currency gained, despite consumer confidence falling to a five-month low due to tariffs causing economic outlook pessimism. Job openings fell to the lowest since September due to weaker job demand, also caused by tariffs. Make America great again, they said…
Donald Trump struck out against Jerome Powell once again citing that he knows “much more about interest rates" than the Fed chair.
The Australian dollar gained overnight after CPI for Q1 came in higher at 0.9%. Markets still continue to price-in a 25bp cut in May.
*Daily move - against G10 rates at 7:30am, 30.04.25
** Indicative rates - interbank rates at 7:30am, 30.04.25
We're looking forward to an abundance of data today, starting with EU growth and German CPI numbers. The growth numbers are backward looking so may not have much of an impact. A weaker CPI print from Germany will likely add to firmer odds of a further 75bp worth of cuts for this year.
US growth is likely to have taken a big hit from Q4 2024 to Q1 2025, given all the uncertainty created by the tariffs. Most of this is known, but, nonetheless a shift from 2.4% to a contraction of 0.2% (the forecast number) is striking. A 100bps worth of rate cuts is pretty much priced-in for this year. It will take a higher number from the core PCE inflation numbers this afternoon to decrease this.
But as we have seen over the last month, much of the market moves have been caused by tariff headlines. Therefore, any backwards looking data may well be ignored by markets. Yesterday, Howard Lutnick suggested that the US has one trade deal done, subject to final approval, but declined to name the country involved.
This morning the EUR has some early demand after French CPI numbers came in higher than expected.
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