During the European session, final Manufacturing PMIs will be released for several major economies, alongside preliminary data for Spain, Switzerland, and Italy. The Eurozone Flash CPI report is anticipated to be the key focus, while in the American session, attention will shift to the US ISM Manufacturing PMI.

The Eurozone CPI is projected to show a year-on-year increase of 2.3%, down from 2.5%, with the Core CPI expected at 2.6%, decreasing from 2.7%. A softer CPI report may alleviate market concerns regarding inflation, influencing the ECB’s policy decisions.

Us Ism Manufacturing Pmi Forecast

The US ISM Manufacturing PMI is forecasted at 50.8, slightly lower than the previous 50.9. Recent S&P Global PMIs indicated an uptick in manufacturing activity, suggesting a rise in production linked to anticipation of rising costs or supply issues due to tariffs.

Fed’s Musalem is scheduled to speak later in the day.

A series of key data releases will guide market movements in the sessions ahead. In Europe, final Manufacturing PMI readings will shed light on factory activity across the region. Meanwhile, traders will assess early estimates for Spain, Switzerland, and Italy, though focus will likely remain on inflation data from the Eurozone. Across the Atlantic, the US ISM Manufacturing PMI will take precedence as markets gauge the strength of industrial output.

Eurozone inflation data carries weight, as expectations point to a slower annual increase of 2.3%, compared to the previous 2.5%. Core inflation, a metric that strips out volatile food and energy prices, is anticipated to dip slightly to 2.6%. If the figures materialise as projected—or come in even lower—the European Central Bank may find reason to reconsider its stance on monetary policy. A weaker-than-expected reading would suggest diminishing price pressures, potentially reining in expectations for tighter financial conditions.

On the other hand, inflation holding firmer than expected could prompt a reassessment of where rates are headed. While the ECB has expressed caution in recent months, persistence in price growth would leave little room for swift policy shifts.

Market Expectations And Central Bank Policies

Over in the United States, attention will turn to manufacturing activity. The ISM Manufacturing PMI is expected to show a reading of 50.8, a minor adjustment from the previous 50.9. A steady figure around this level indicates neither strong expansion nor contraction but does highlight resilience in the sector. Recent S&P Global data suggested manufacturing picked up, driven in part by firms ramping up production ahead of expected cost increases or potential supply constraints stemming from tariffs.

Later in the session, markets will hear from Alberto, whose remarks could offer insight into how policymakers view the current environment. Depending on his tone, traders might recalibrate their expectations regarding future rate decisions. Given the broader inflation concerns and shifting economic conditions, any hints on potential changes to the central bank’s approach will be parsed closely.

Market participants should remain mindful of how incoming data could alter the prevailing narrative. Inflation readings and manufacturing activity are both integral to shaping rate expectations, and any surprises in the numbers could prompt swift adjustments in positioning. The balance between monetary policy shifts and broader economic performance remains at the forefront, and with policymakers set to speak, their words may carry weight in the days ahead.

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Eurostoxx futures rose by 0.5% in early European trading, influenced by Wall Street’s gains at the end of Friday. German DAX futures advanced by 0.7%, and UK FTSE futures increased by 0.5%.

The late rally in US stocks on Friday remains unexplained, as other markets did not exhibit the same behaviour. This raises the possibility that the movement could be attributed to last-minute month-end rebalancing flows. Dip buyers may have protected tech shares, especially those in the Nasdaq, against a test of the 200-day moving average. S&P 500 futures also noted an increase of 0.2% as a new week and month commenced.

European Equities Gain Momentum

European equities followed the momentum from Wall Street, pushing higher in the early hours. Investors appear to be carrying forward the optimism from last week, though the reasoning behind Friday’s late surge remains open to interpretation.

If month-end rebalancing was indeed at play, then it would suggest that institutional adjustments, rather than a shift in sentiment, primarily fuelled the late recovery. That could mean any follow-through in the coming days will need an additional catalyst. The fact that US stock indices found support at key technical levels implies some traders saw value in stepping in before heavier losses took hold, especially in tech-heavy sectors.

Meanwhile, bond markets show little indication of stress. Yields on US Treasuries remain within recent ranges, reflecting stability in fixed-income positioning. Interest rate expectations have not materially shifted, and pricing in swaps markets continues to suggest that policymakers may not need to make immediate adjustments. Currency markets also remain largely steady, with the dollar holding its ground against major peers.

Market Drivers This Week

This week’s key question is whether Friday’s late rally was an isolated event or the beginning of a broader shift. If sentiment genuinely strengthens, then follow-through buying should emerge. If flows were merely mechanical, a lack of fresh catalysts could see indices struggle for direction.

Attention will be on upcoming economic data and central bank rhetoric to assess whether momentum can build. Without encroaching risks, market positioning may dictate near-term moves, particularly as investors assess their exposure for the new month. Contrarian moves could surface if any unexpected developments challenge the current calm, particularly in rate-sensitive sectors.

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AUD/JPY has fallen to nearly 93.00 during European hours on Monday as the Japanese Yen remains strong. This strength is supported by expectations of ongoing interest rate hikes by the Bank of Japan (BoJ) and a rise in Japan’s 10-year government bond yield to 1.4%.

Japan’s Vice Finance Minister indicated that both large and small companies expect strong wage increases, although real private consumption is still below pre-Covid levels. Meanwhile, corporate investment and inbound tourism are robust.

Chinese Economic Data And Australian Dollar

Positive Chinese economic data, particularly a rise in the Caixin Manufacturing Purchasing Managers’ Index (PMI) to 50.8 in February, has bolstered the Australian Dollar. This reading exceeded analysts’ expectations and highlights the significance of China as a trading partner for Australia.

In Australia, the TD-MI Inflation Gauge saw a month-to-month decrease of 0.2% in February, marking the first decline since August. Despite this, the annual inflation rate rose to 2.2%, down from 2.3%.

Interest rates, influenced by central banks, directly affect currency values and economic conditions. Higher interest rates typically strengthen a country’s currency by attracting global investment.

The Fed funds rate represents the interest banks charge each other overnight and is used as an economic indicator for financial markets. Market expectations of future Fed positions can be tracked using tools such as the CME FedWatch tool, which helps forecast economic trends.

Bank Of Japan Policy And Market Implications

The Japanese Yen is holding its ground as expectations persist that the Bank of Japan will continue to raise interest rates. We have also seen Japan’s 10-year government bond yield climbing to 1.4%, reinforcing this perspective. These two factors play an important role in keeping the Yen strong. While the currency’s strength might not surprise those who have been watching closely, the idea that both large and small businesses in Japan anticipate higher wages gives an additional reason to believe that inflationary pressures could remain present. Even though private consumption hasn’t returned to pre-pandemic levels, corporate investment continues to be lively, and inbound tourism is adding further momentum to the economy.

On the Australian side, there was some initial optimism due to the latest Chinese economic data. February’s Caixin Manufacturing PMI came in at 50.8, which was better than analysts had expected. Given China’s role as Australia’s biggest trading partner, this is good news for Australian exports. However, the Australian Dollar struggled against the Yen despite this data, which tells us that Yen strength is still the dominant force in this pair.

Inflation data out of Australia also gave traders something to think about. The monthly TD-MI Inflation Gauge showed a 0.2% drop in February—the first decline since August. But while that may suggest cooling inflation, the yearly figure actually moved up slightly from 2.3% to 2.2%. It’s a mixed picture, and with inflation refusing to settle entirely, the Reserve Bank of Australia will have to consider how to respond at its upcoming meetings.

When looking at interest rates across major economies, central bank policies have an effect on currency valuations. Higher rates tend to draw global investment, strengthening the respective currency, while lower rates can weaken it. That’s why traders monitor key rates such as the Fed funds rate, which influences borrowing costs in the US. Tools like the CME FedWatch provide insight into future Federal Reserve decisions, helping us anticipate how financial markets might react.

For now, with the BoJ signaling that it is in no hurry to soften its stance and the Australian economy showing both encouraging and mixed signals, those trading derivatives in this market should stay attuned to central bank commentary, inflation data, and any broader shifts in risk sentiment.

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The upcoming meetings of major central banks are expected to yield notable decisions. On 6 March, the European Central Bank is anticipated to implement a 25 basis points rate cut, which is fully priced in.

On 12 March, the Bank of Canada shows a near equal chance of a 25 basis points rate cut. The Bank of Japan is expected to maintain its current rate on 19 March, with a 99% probability of no change, along with the US Federal Reserve, which has a 93% likelihood of not adjusting rates. The Bank of England and the Swiss National Bank are also likely to keep their rates unchanged and cut by 25 basis points respectively on 20 March.

Market Expectations And Policy Communications

While these decisions align with market expectations, the communication from these banks will be closely watched. The ECB and SNB may see their last guaranteed cuts, while the Bank of Canada may consider a cut in April. The Bank of Japan might wait to address spring wage negotiations, and the Bank of England remains cautious regarding any adjustments.

In the case of the US Federal Reserve, traders now expect the next rate cut to occur in June, moved up from September. There is speculation on whether the Fed will acknowledge recent economic shifts or maintain current policies without easing strategies.

Market movements over the next few weeks will be shaped not just by official rate decisions but also by how policymakers guide expectations. Christine, leading the ECB, has a careful balancing act to perform. A 25 basis points cut on 6 March is already priced in, but her statements could shape forecasts for further reductions. If she signals hesitation beyond March, we may see an upward move in the euro, as traders pare back aggressive easing bets.

Tiff at the Bank of Canada faces a different situation. The 12 March meeting carries nearly even odds of a rate reduction, leaving room for volatility. If no cut is announced, Canadian yields might rise, particularly at the short end of the curve. The April meeting could then take on greater focus, with traders adjusting positions accordingly. Keeping a close eye on any shifts in his tone will be key.

Meanwhile, Kazuo at the Bank of Japan has little immediate pressure to raise or lower rates, but markets may still react if he hints at future changes. The probability of an adjustment on 19 March remains negligible, yet wage negotiations could later alter the policy discussion. If he hints that tightening is on the table, even if remote, the yen could strengthen.

Bank Of England And Swiss National Bank Outlook

Andrew’s Bank of England meeting on 20 March leans towards no shift in rates, yet traders will watch for any signs of softening. The UK economy faces uncertainty, and if he signals greater openness to easing, sterling may adjust downward. However, should he take a more reserved approach, rate-sensitive assets could experience smaller fluctuations.

The SNB is in a different position. The expectation is a 25 basis points cut, and Thomas is unlikely to surprise. If the statement signals that this move marks a pause, positioning in the Swiss franc may reflect reduced expectations for additional easing. Alternatively, a more dovish stance could put downward pressure on the currency.

Jay at the Federal Reserve finds himself scrutinised as traders anticipate a shift in June rather than September. The 20 March meeting will not bring a rate change, but his language matters. If inflation concerns persist, expectations regarding the timing of a cut could shift again. Bond markets will be particularly sensitive to any indications of concern over recent strength in economic data. A lack of urgency could lead to adjustments in positioning, while any firm signals of policy softening might amplify rate-cut expectations.

With central bank actions largely in line with forecasts, attention turns to forward guidance. Any deviation in messaging—whether hawkish or dovish—has the potential to fuel volatility. Traders should be ready for swift price reactions, particularly in the currency and bond markets, as expectations are reshaped.

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The recent developments in the Oval Office have shifted attention back to tariffs as the new month begins. Tariffs imposed by Trump on Canada and Mexico are expected to start tomorrow, with the deadline for negotiations now urgent.

Previous discussions regarding issues like fentanyl appear to have been sidelined, raising questions about whether there will be delays in the tariff implementation. US commerce secretary Lutnick has indicated that tariffs will indeed be enacted but has left details for Trump to negotiate.

Early Actions And Uncertainty

In the initial 42 days of his presidency, actions have yet to match rhetoric, leaving uncertainty about the immediate future.

Tariffs on Canada and Mexico are now set to take effect as scheduled, unless an unexpected shift occurs in the ongoing talks. With discussions still active, it is unclear whether any last-minute changes will emerge. Trump has continued to express confidence in his position, while Canadian and Mexican representatives remain firm in their responses. Negotiators from both countries have maintained that they will not accept terms they deem unfair.

Lutnick’s stance further complicates matters, as his statements suggest that while the tariffs are officially moving forward, the final decision remains with Trump. This adds another level of unpredictability since his previous statements on trade have not always aligned with the measures ultimately taken. Businesses with exposure to these markets must now prepare for potential disruptions, while also factoring in the possibility of concessions being made at the last moment.

The decision-making so far has not followed a clear pattern. While early signals pointed towards a strict enforcement of trade measures, past instances have shown that adjustments can be made unexpectedly. Some policy announcements have been bold, only for the actual implementation to be delayed or softened. If this happens again, markets may respond with some volatility, as initial reactions to tariffs tend to be immediate. Whether this will be a repeat of past behaviour or something entirely different remains to be seen.

Shifts In Policy Priorities

Beyond tariffs, other policy matters have received less focus in recent speeches. The fentanyl issue, which was previously described as a priority, has now been mentioned less frequently. External observers have noted that this shift in priorities appears to reflect where pressure is being applied the most. While some argue that decisions are being made strategically, others suggest that changes in direction are based on immediate circumstances.

In practical terms, the coming days could produce unexpected reactions in sectors that rely on North American trade. If the tariffs go forward without adjustment, industries that depend on cross-border supply chains will likely face cost increases. If delays occur, however, some of the recent anticipation in the market will quickly reverse. With no official statement providing further clarity, businesses must weigh the likelihood of either result based on past patterns.

Market participants watching these developments must consider which signals hold the greatest weight. Early statements from Trump have often been declarative, but adjustments have followed behind closed doors. Confidence from negotiators such as Lutnick implies that firm action is coming, yet there remains a possibility that conversations will continue until the last available moment. If there is one clear expectation, it is that uncertainty will persist until a final announcement is made.

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Austria’s unemployment rate decreased to 8.1% in February, down from 8.6% in the previous month. This change indicates a positive trend in the labour market.

The unemployment figures suggest improvements in job availability within the country. Continued monitoring will be essential to understand the broader economic implications of this decline.

Job Market Improvements

A decrease in Austria’s unemployment rate to 8.1% from 8.6% signals a shift in the job market, pointing to better employment opportunities. The percentage drop from January suggests that either hiring has picked up or fewer people are actively seeking work. Whatever the driving factors, a lower unemployment rate often supports consumer spending and economic confidence.

For those of us looking at where markets are headed, this kind of shift matters beyond just the labour sector. A stronger job market could influence monetary policy decisions if wage growth follows suit, potentially prompting adjustments in interest rates or economic projections. It also means businesses may be experiencing steadier demand, which could shape investment flows.

One question that we need to keep in mind is whether this trend continues or if it is more of a temporary dip. A single month of improvement is helpful, but it does not guarantee a long-term change. Further data from the coming months will show whether the employment market is genuinely strengthening or if seasonal factors played a role.

Economic Implications

For now, the drop in unemployment could imply steadier wage expectations, which in turn might affect certain financial instruments. Those tracking employment metrics for investment decisions should watch whether hiring momentum carries forward or if external pressures, such as global economic shifts, begin to weigh on Austria’s workforce again. In any case, employment figures like these often provide early clues about where broader economic patterns might be heading.

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The Japanese Yen (JPY) is strengthening against the US Dollar (USD) amid expectations of interest rate hikes by the Bank of Japan (BoJ). Increased JGB yields support the JPY, although US Dollar selling is not benefiting the USD/JPY pair, which is struggling to maintain levels near 151.00.

BoJ Governor Kazuo Ueda warned of the uncertainties in global economic policy, affecting JPY’s rises. Traders are cautious, waiting for upcoming US macro data, starting with the ISM Manufacturing PMI, which holds relevance for future market direction.

Japan Economic Growth And Inflation

Japan’s recent economic data shows growth and persistent inflation, supporting the case for further BoJ rate increases. The au Jibun Bank Manufacturing PMI reported a final reading of 49.0 for February, indicating the softest contraction in three months.

President Trump announced tariffs on Canada, Mexico, and increased tariffs on China, adding pressure on the USD. The Personal Consumption Expenditures Price Index declined slightly to 2.5% in January, while core PCE rose to 2.6%, influencing market speculation on Federal Reserve interest rate cuts in 2025.

Technically, the USD/JPY pair is facing resistance near 151.00 and has shown lower oscillators, suggesting a possible downward trend. A drop towards 150.00 is feasible, while strong momentum beyond 151.00 could signal a rally towards higher resistance levels.

Impact Of ISM Manufacturing PMI

The ISM Manufacturing PMI, a key economic indicator, will be released on 3 March 2025 with expected readings of 50.8, indicating potential economic expansion.

PMI readings above 50 denote growth, influencing market sentiment towards the USD. Stronger results could reflect positively on both the manufacturing sector and the dollar’s standing.

The yen has been gaining strength against the dollar as markets anticipate that the Bank of Japan will push ahead with interest rate increases. Higher Japanese government bond yields are reinforcing the currency’s position. Yet, despite weakened demand for the greenback, the dollar-yen pair is struggling to hold levels near 151.00.

Kazuo, leading the Bank of Japan, has pointed out the challenges that global economic policies bring. His remarks have introduced some turbulence into the yen’s rise. At present, traders are hesitating, watching closely for new economic data from the United States. The ISM Manufacturing PMI is the first major report on the schedule, and it is expected to shape market direction in the coming days.

Japan’s economy has continued to expand, and inflation has remained steady. Both factors make further rate hikes more likely. A recent survey tracking activity within Japan’s manufacturing sector posted a reading of 49.0 for February. While still representing a decline in activity, it was the mildest contraction in months.

Donald has made a fresh push on tariffs, imposing new trade measures on Canada and Mexico while increasing levies against Chinese goods. These decisions have added more weight on the dollar. Meanwhile, the latest PCE Price Index figures have shown mixed results. The main index softened to 2.5% in January, but the core measure, which strips out volatile food and energy prices, ticked up to 2.6%. This has nudged markets towards greater speculation regarding potential Federal Reserve rate cuts next year.

From a technical perspective, the dollar-yen pair is finding resistance around the 151.00 mark. Indicators hint at weaker momentum, creating conditions for a possible move lower. A drop towards 150.00 would not be out of place, although if buyers push through, an advance into higher levels could develop.

The focus now turns to upcoming US data, particularly the ISM Manufacturing PMI set for release on 3 March 2025. Forecasts suggest a reading of 50.8, which would signal expansion within the sector. When these figures climb above 50, they highlight growth, which in turn affects investors’ confidence in the dollar. If the report exceeds expectations, it could offer support for the currency and influence sentiment across the board.

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USD/CHF experiences slight losses, trading around 0.9020 in early European sessions, influenced by declining US Dollar strength and increased demand for the Swiss Franc as a safe-haven asset amidst global tensions.

The US Dollar Index drops to nearly 107.25 as traders anticipate potential rate cuts from the US Federal Reserve later this year. This situation is compounded by uncertainties surrounding the Russia-Ukraine conflict, which further enhances the appeal of the Swiss Franc.

The Role Of The Swiss Franc

The Swiss Franc, Switzerland’s official currency, is among the top ten most traded globally. Its value is shaped by economic conditions, market sentiment, and actions from the Swiss National Bank.

As a safe-haven currency, the Swiss Franc attracts investment during periods of market stress, thanks to Switzerland’s stable economy, robust export sector, and a history of political neutrality. The Swiss National Bank influences the Franc through its monetary policies aimed at controlling inflation.

Macroeconomic data from Switzerland is crucial in determining the Franc’s value. Economic growth metrics, inflation rates, and changes in central bank reserves impact the currency’s valuation directly, reflecting its stability amidst external pressures, particularly from the Eurozone.

The slight dip in USD/CHF around 0.9020 highlights a shift in market sentiment, where traders are pulling back on the US Dollar while increasing exposure to the Swiss Franc. The Dollar’s retreat, as seen in the Dollar Index falling to approximately 107.25, aligns with expectations that the Federal Reserve may begin cutting interest rates this year. This has made holding the currency less attractive. At the same time, broad geopolitical unease, particularly tied to Eastern Europe, has strengthened demand for safe-haven assets, with the Franc benefiting accordingly.

Impact Of Central Bank Policies

The Swiss Franc consistently holds its place as one of the most traded currencies worldwide. Its movements reflect a combination of domestic fundamentals, investor sentiment, and central bank strategies. Switzerland’s stable economic framework and neutral political position make it highly sought after, especially in times of uncertainty. Historical patterns suggest investors shift towards the currency when global risks rise, leading to bouts of upward pressure.

Setting aside general sentiment, traders must also monitor how the Swiss National Bank guides monetary policy to influence the Franc. Interest rate changes, interventions in foreign exchange markets, or shifts in inflation targets have all driven price action in the past. The central bank maintains a strong hand in ensuring the Franc does not appreciate too sharply, given Switzerland’s reliance on exports.

Economic releases from Switzerland remain central to understanding where the Franc may be headed next. Data such as retail sales, GDP growth, and inflation numbers reveal how resilient the domestic economy remains in response to external shocks. In the current setup, pressures from the Eurozone could add another source of volatility, particularly if economic data from key European partners starts to deteriorate.

For traders operating in derivatives markets, these factors cannot be ignored. Movements in this pair tend to be reactive rather than speculative, meaning short-term shifts often stem from broader macroeconomic events. As expectations on Federal Reserve policy shift and uncertainty in global markets persists, being aware of central bank commentary and economic figures will be necessary to anticipate the next directional move.

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On 3 March at 10am New York time, there is a notable FX option expiry for USD/CAD at the 1.4440 level. This expiry does not connect with any technical levels.

With ongoing developments regarding tariffs, particularly linked to Trump’s plans, market performance may reflect increased volatility as the day progresses. The present options may help stabilise price movements prior to US trading. Further guidance on utilising this data can be found in additional resources.

Impact On Intraday Price Action

While this expiry does not align with any clear technical markers, it still plays a role in intraday price action. Expiries of this size often attract attention, as trading desks assess whether hedging flows will contribute to short-term directionality. Given that these flows tend to emerge closer to the cut, the hour leading up to 10am in New York could see activity pick up, particularly if spot prices hover near the strike.

Beyond this, broader themes remain just as relevant. Discussions on tariffs continue to shape positioning, with Donald’s intentions drawing market focus. If trade policy rhetoric escalates, this could trigger greater movement in USD/CAD beyond what would typically be expected on an expiry-driven session.

Price stabilisation ahead of key US hours is something we may see, with options flows dampening swings before more directional forces take over post-expiry. While this carries weight in the morning session, the afternoon could bring a different rhythm, especially if fresh macro catalysts emerge.

As for how to navigate this, awareness of expiry-related positioning serves as a tool rather than a complete strategy. If spot moves within range of 1.4440, certain hedging flows could reinforce short-term levels, but once the expiry rolls off, pricing dynamics may shift. Whether the expiry holds influence or fades into a broader trend depends largely on prevailing sentiment and liquidity at the time.

Liquidity Conditions And External Catalysts

One factor influencing liquidity conditions is how traders react to the latest tariff discussions. If headlines shift expectations, any previous stability introduced by options flows could dissipate, giving way to larger movements. This makes it valuable to track both spot levels and sentiment throughout the session rather than assuming that the morning’s structure will persist into the later hours.

Aside from this, market participants should also remain adaptable to external catalysts. Economic data releases and shifts in risk sentiment can override expiry effects when the conditions align. With this in mind, having an understanding of the potential for price containment in the short run while also assessing broader shifts remains key.

This expiry provides a reference point, but the greater question remains whether it holds sway beyond the morning action. If external forces pick up, the afternoon could bring a different pace, meaning that flexibility remains at the forefront of how traders approach this session.

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This week features various manufacturing and services Purchasing Managers’ Indices (PMIs) from Europe, Canada, and the U.S., along with U.S. and Canadian labour market statistics.

The week starts with manufacturing PMIs from multiple regions, centring on the U.S. ISM manufacturing PMI and prices. Australia’s monetary policy meeting minutes and retail sales data will be released on Tuesday, while Wednesday focuses on Australia’s GDP data and Switzerland’s inflation figures.

Thursday includes the ECB’s monetary policy announcement and U.S. unemployment claims data. Key labour market data from the U.S. and Canada will be released on Friday.

Us Manufacturing Outlook

For the U.S., the ISM manufacturing PMI consensus is 50.6, slightly lower than 50.9, while ISM manufacturing prices are expected to rise to 56.2. Last month, the manufacturing PMI index exceeded 50, suggesting expansion, despite headwinds from weak global demand and higher interest rates.

The ISM services PMI consensus is set at 53.0, up from 52.8, indicating a resilient services sector amid economic uncertainty. Analysts note that consumer demand for services is strong, supported by a robust labour market, although inflationary pressures remain.

Switzerland’s CPI is expected to rise by 0.5% month-over-month, aligning with a 0.2% quarterly economic expansion in Q4 2024. With inflation easing, a 25 basis points rate cut from the Swiss National Bank is anticipated.

The ECB is also likely to announce a 25 basis points rate cut, as recent inflation figures and economic contractions in Germany and France prompt continued policy easing.

In Canada, employment change is predicted to be 17.8K with a slight unemployment rate rise to 6.7%. Ongoing uncertainty regarding U.S. tariffs may hinder hiring momentum, despite recent labour market stabilisation.

In the U.S., average hourly earnings are expected to rise by 0.3%, while non-farm employment change may reach 156K. The unemployment rate is anticipated to remain at 4.0%, though slower labour demand is indicated by declines in small business hiring and job postings.

Wells Fargo predicts a potential uptick in the unemployment rate to 4.1% and a slight decline in federal government payrolls due to workforce reductions. Economic factors suggest that slower labour force growth may limit future wage declines.

The upcoming days bring a series of releases that will shape expectations across multiple sectors. Manufacturing and services PMIs across key global economies will provide fresh insights into business conditions, while employment reports from North America will set the tone for wage trends and hiring activity.

A weaker reading for the U.S. ISM manufacturing PMI suggests that growth across factories could be stalling, even as manufacturers navigate higher borrowing costs and weakened international demand. However, prices in this sector are continuing to climb, pointing to stubborn cost pressures that may affect future production decisions. Services, meanwhile, appear to be holding firm despite ongoing pressure from shifting consumer habits and tighter financial conditions.

Australia’s economic data will show how its economy performed in the last quarter, with its monetary policy minutes shedding light on rate-setters’ latest views. Inflation in Switzerland, expected to rise modestly, fits into a wider pattern of subsiding cost pressures, offering policymakers enough confidence to proceed with gradual rate cuts. The decision by the Swiss National Bank is likely to confirm what many have been anticipating: more policy easing ahead.

European Central Bank Policy Shift

In Europe, all eyes will be on Christine and her colleagues as they reveal their latest monetary policy adjustments. With inflationary pressures appearing to moderate and Germany and France struggling with weaker output, the expected rate cut from the ECB is in line with previous signals. The central bank remains focused on balancing its response to economic weakness while ensuring it does not move too aggressively.

Canada’s employment report is likely to reflect a mix of stabilisation and underlying concerns. While hiring numbers show continued resilience, the rise in unemployment could highlight hesitancy among businesses facing uncertainty around trade policy. Another month of moderate wage growth could reinforce expectations that the employment situation is cooling gradually rather than faltering outright.

On the other side of the border, wage growth in the U.S. remains in focus, with a modest rise in hourly earnings anticipated. Hiring figures, while positive, are expected to soften, reflecting a more cautious stance among employers. Although the country’s unemployment rate has held steady at 4.0%, Wells Fargo’s forecast of a slight uptick suggests that wider economic shifts are beginning to influence job markets. Additionally, planned reductions in federal payrolls could further shape the overall employment picture.

These labour market shifts, paired with the inflation outlook and monetary policy developments, will play a key role in shaping expectations among those closely watching how central banks respond. While the data provides clarity in some areas, it also leaves open questions about the path ahead for interest rates and employment conditions.

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