The European session will present the final PMI readings for the UK and major European economies. Market pricing is unlikely to change unless these readings see significant revisions. During the American session, focus will shift to the Canadian Manufacturing PMI, the final S&P Global US PMI, and the US ISM Manufacturing PMI. The ISM report usually influences market movements, with recent soft data showing improvement. Market participants will also evaluate inflationary pressures.

Central Bank Activities

There will be several central bank speakers throughout the day. At 14:15 GMT, Fed’s Logan, a non-voter, will speak. This will be followed by ECB’s Lagarde and Fed’s Goolsbee, both voters, at 16:30 GMT and 16:45 GMT, respectively. At 17:00 GMT, Fed Chair Powell will address the markets, and BoE’s Mann, a voter, will wrap up the day at 21:30 GMT. The data we have suggests that much of the market movement may come from interpreting trends rather than unexpected figures. The Purchasing Managers’ Index for the UK and Europe should be confirmed, but we shouldn’t expect large pricing changes unless they differ significantly from the flash estimates. Traders should focus not just on these readings, but also on how companies manage hiring and inventory, as these factors can indicate broader economic changes in the coming months. The ISM data in the US carries more weight due to its long track record and historical impact on yield curves and risk assets when manufacturing figures shift. Recent soft readings have begun to rise, hinting at a potential reacceleration, especially as production components strengthen. For now, markets will be alert for any signs within pricing or supplier delivery times that could suggest ongoing cost pressures. It’s important to consider more than just the headline numbers.

Monetary Policy Signals

Looking at monetary policy signals, there will be a series of central bank comments later in the day. While not all speakers have the same market impact, the order of their remarks is important. Logan’s early comments may influence initial expectations, even if they aren’t as impactful this year. Lagarde’s speech will be closely watched, especially as the ECB approaches possible changes in guidance. Traders with euro exposure will likely focus on whether she supports expectations for rate cuts before summer. Later, Goolsbee and Powell will speak. Since Powell is the last Fed member to comment today, any market adjustments may happen late in the session. Powell has been a stabilizing voice lately, often countering overly optimistic views. If his language is more open-ended or if he discusses labor supply deeply, traders may need to rethink their views on terminal rate changes, even if those changes aren’t immediate. Mann will conclude the lineup, but markets will likely have already formed conclusions by then. Her comments can significantly sway GBP rates, especially if she diverges from the dovish stance of other members. If she expresses concern about persistent inflation, we might see shifts in short-term rate expectations, even if subtle. From a positioning standpoint, timing is critical. Instead of trying to predict each release, it makes more sense to evaluate how expectations will adjust afterward. Implied volatility has softened, which ironically increases the chance for sharp reactions if there are surprises. Additionally, options flows are already showing interest in hedging around Powell’s speech. For these reasons, we’ve moderately scaled back our exposure while extending the duration of some positions. It’s not just the content of the remarks that matters, but also the delivery and how close we are to pivotal points in policy. Situations like these call for a keen focus on tone, not just text. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now