Weekly Outlook | Recession worries to drive market sentiment
Updated Updated Wed, 2025 April 2 01:34
Important events this week:
This week will feature several important news releases. In particular employment data from the US on Friday will be in focus. Worries have been piling up whereas most US banks expect that a recession will soon follow. Some “soft” economic data like the purchasing manager index manufacturing came in negative and in particular Trump’s announcements in regards to tariffs might weigh negative on markets this week. Friday’s NFP data is expected to come in at 139k newly created jobs. Recent adjustments in US policies might already start to show some impact here, cementing previously mentioned worries. Also, the corporate sector is starting to criticize the Republican policies.
Last but not least last week’s PCE- inflation data came in slightly higher at 0.4%. The Fed is hence only expected to cut rates twice or maybe even only one time this year, since inflation data is not coming down. Some observers might expect, that the current mix will lead to a further increase in negative market momentum.
– AU interest rate decision– Based on the above development in particular the AUDUSD might be worth noting. The Aussi is considered a ‘risk- on” currency, meaning that it usually gears up steam, when markets are rising. As in particular US indices closed last week at the verge of heading lower, the direction of the AUD could act as guidance here. After reducing rates at their recent meeting last month, it is not expected that the RBA will cut interest rates again this month. However, the AUD had lost some steam and might offer further weakness.
AUDUSD currency pair, monthly chart
The news event takes place at the first trading day of April. After the month of March ended bearish, slight upside momentum might now occur. Unless the recent high at 0.6410 is broken, further downside momentum might occur. Any retracements higher towards the zone at 0.6310, where the 50-moving average based on the weekly charts acts as resistance, might be used as entry opportunities. The interest rate decision form Australia will be released on the 01st of April, 2025 at 05:30 CET.
– US ISM services PMI– The PMI index in general might now be of extreme importance in general. Yet, it seems that the economic sentiment is changing to the downside. It is expected that the data comes in at 53,0 down from 53.5 last month.
The S&P 500 index had recently retraced higher but does not seem to be able to defend the positive sentiment towards the end of the month.
S&P 500 index, weekly chart
Based on the weekly chart above, a break of the 50- moving average sems to happen and any negative reading on the PMI data might support the bearish sentiment. The index from the US will be published on the 03rd of April, 2025 at 16:00 CET.
– US NFP employment data– The NFP report is expected to come in at 139.000 newly created jobs and hence slightly lower compared to 151.000 during the last release. Any deviation from the expectation might cause the market to move further, yet currently the expectation might be tilted do the downside. A better result might hence only support the Dollar slightly, whereas a weaker reading might underpin the negative market sentiment.
USDJPY currency pair, weekly chart
Currently, the price seems limited by the 50- moving average to the upside. A break of the 148.00 zone might hence release more downside momentum. The data from the US will be published on the 04rd of April, 2025 at 14:30 CET.
