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Is the ECB's "back-to-back interest rate cut" arrow on the string? Inflation data this week may shake the Fed's wait-and-see position
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Hello everyone, today XM Foreign Exchange will bring you "[XM Foreign Exchange Market Review]: The ECB "back-to-back interest rate cut" is on the string? This week's inflation data may shake the Fed's wait-and-see position." Hope it will be helpful to you! The original content is as follows:
Asian Market Review
On Monday, the US dollar index maintained an upward trend and finally closed up 0.56% to 103.5. The benchmark 10-year U.S. Treasury yield closed at 4.177%, and as of now, the gold price is 103.95.
Trump: Reciprocal tariff measures will not be suspended, and the EU's proposed mutual exemption policy will be rejected. Foreign media: Trump's team considers implementing a tax credit policy for exporters; seven Republican senators "turned over" to support bills that restrict Trump's tariff power.
After the market shock, the White House urgently refuted the rumors: The statement that the 90-day suspension of tariffs is all "fake news."
U.S. Treasury Secretary Bescent: It is unlikely to reach a trade agreement (with any country) by April 9, with nearly 70 countries seeking negotiations.
Trump economic adviser Hassett: It's time to moderately ease the tariff wording. White House Trade Advisor Peter Navarro: Talk about the recession is "stupid" and tax cuts are xm-links.coming.
The U.S. plans to impose a 34.45% tariff on Canadian timber, currently at 14.4%.
The EU plans to impose a 25% tariff on some U.S. products on April 15, and implement it in two steps. The second part will be imposed on May 15.
Japan's firstThe photo shows that it will not fight against the United States.
Federal Governor Coogler: Ensuring inflation does not rise is a priority, and the inflation issue is more urgent at present.
The Federal Reserve held a closed-door meeting to review the prepayment rate and discount rate.
Trump: The United States will conduct direct negotiations with Iran, and high-level negotiations are expected to take place on Saturday. US media revealed that the negotiations were in Oman.
BlackRock CEO: Most of the CEOs I came into contact with believe that the US economy has fallen into recession. It is not ruled out that the market will fall by 20%.
Summary of institutional views
Goldman Sachs has made major adjustments to the US dollar view! Is weakness not a short-term phenomenon?
We have made a significant shift in our view of the US dollar in the xm-links.coming year: We now believe that the weakness of the US dollar will continue and further intensify in the first quarter. We believe tariffs are unlikely to support the US dollar for the following reasons. First, the xm-links.combination of unnecessary trade wars and other policies that increase uncertainty is seriously undermining consumer and business confidence, so any driving force that is favorable to the dollar is offset by the possibility of slowing economic growth. Second, negative trends in U.S. institutions are eroding the excessive privileges long-term enjoyed by U.S. assets, which is dragging down U.S. asset returns and the U.S. dollar, which may continue to be the case in the future unless reversed.
Third, related to this, the implementation of tariffs is weakening investors' ability to price tariffs. Although the strengthening of the dollar provides the most natural room for adjustment for tariffs, the continuous recurrence of the timeline has exacerbated uncertainty, which is the cause of the rising risk of recession. Furthermore, widespread tariffs leave foreign producers less motivated to provide any convenience than targeted tariffs—U.S. businesses and consumers become price recipients, and if the supply chain and/or consumers are relatively inelastic in the short term, the dollar needs to depreciate to adjust. This shift will reverse the "special" positioning that supports the strong valuation of the US dollar.
We modified the EUR-USD forecasts after 3, 6 and 12 months to 1.12, 1.15 and 1.20 (previously 1.07, 1.05 and 1.02), and also modified the US-Japan forecasts to 138, 136 and 135 (previously 150, 151 and 152). This will bring the dollar closer to the long-term fair value measurement. There are many risks to this forecast, including the possibility of xm-links.compelling policy shifts that eliminate some of the uncertainties that affect U.S. data. Furthermore, a rapid shift in tariff policies could create global chaos enough to activate the "left-tail risk" of the smile of the dollar, which currently looks more distant.
Fanong Credit: Market misjudgment? The expectation of interest rate cuts may be seriously out of touch with the reality of inflation
We expect that the overall CPI annual rate of the United States in March will drop from 2.82% to 2.49% driven by energy xm-links.components; driven by hotel and air ticket prices, the core CPI monthly rate will rebound slightly from 0.23% to 0.https://xm-links.com27%, the monthly rate of core xm-links.commodities will record zero growth. The market will obviously look for preliminary evidence of the impact of tariffs in the March CPI data. As the first batch of tariffs were implemented in early February and March, respectively, at 10%, we expect the impact to be very limited. But the risks may still be biased towards upwards, especially for core xm-links.commodities.
In addition to this CPI data, large-scale peer tariffs have brought strong upside risks to recent inflation and put huge pressure on financial markets. A report that meets expectations will not change the Fed's "wait and see" position, especially the Fed may hope to A better understanding of how tariffs will affect inflation data in the xm-links.coming months. The market is clearly overly focused on employment, rather than inflation, and is currently expected to cut interest rates by more than four and a half times by the end of the year. However, we do not think this is correct, and we currently believe that stubborn inflation may limit the level of easing the Fed can achieve.
Nomura Securities: Inflation data will give the Fed a difficult problem
We expect the U.S. core CPI monthly rate in March may rebound from 0.227% in February to 0.278%. Early purchases and price increases in response to tariff hikes have pushed up the prices of core xm-links.commodities. Used car prices seem to ease, but non-auto core xm-links.commodities prices continue to face inflationary pressures. While conventional rents and OER inflation may remain Stable, but we expect super core services inflation to rebound moderately from 0.216% in February to 0.294% in March due to rising accommodation prices and slowing down air ticket prices.
Based on our CPI and PPI forecasts, we expect core PCE monthly rate to slow to 0.137% in March. This may be due to a decline in airfare prices and portfolio management services prices. Given the increased inflation pressure caused by tariff hikes and strong data for January and February, the slowdown in core PCE inflation in March is unlikely to have an impact on the Fed. We expect tariffs to cause a surge in core PCE in the xm-links.coming quarters, which could lead to a delay in the rate cut cycle until December this year.
Goldman Sachs: Despite Tariff escalation has become a hindrance to inflation downturn, but the slowdown in inflation will continue to advance
We estimate the core CPI in March to grow by 0.27% month-on-month (after seasonal adjustment), which will reduce annual rate by 0.1% to 3.0%. Our forecast reflects a decline in used car prices (-0.5%), which is consistent with the downward trend of auction prices. New car prices are expected to rise slightly by 0.1% due to dealer discounts. At the same time, according to our online policy data set, the auto insurance category will rise sharply by 1.0%. We expect air ticket prices to rebound by 2% after the plunge last month, and make a moderate increase in categories that are importing too high from China (such as clothing, entertainment supplies, xm-links.communication equipment) due to tariff transmission. Housing costs (owner equivalent rent OER andMajor rents +0.27%) are expected to remain basically the same, while the price of out-of-stay accommodation is expected to fall by 0.5%. The overall CPI is expected to rise slightly by 0.08%, mainly affected by the xm-links.combined impact of rising food prices (+0.2%) and plunging energy prices (-2.5%). This forecast is basically consistent with the expected increase of 0.22% of the core PCE price index in March. We will update the core PCE forecast after the CPI data is released.
Although Trump's escalation of tariffs may be a hindrance to inflation, rebalancing of the automobile market, adjustments to the housing rental market and labor market changes will continue to drive the inflation slowdown in the next 12 months.
The above content is all about "[XM Foreign Exchange Market Review]: The ECB's "back-to-back interest rate cut" is on the string? This week's inflation data may shake the Fed's wait-and-see position". It was carefully xm-links.compiled and edited by the XM Foreign Exchange editor. I hope it will be helpful to your trading! Thanks for the support!
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