Investors and forex traders are awaiting the key event of the week — the release of March US labor market data. According to forecasts, the unemployment rate is expected to hold around 4.4%, while employment is projected to increase by 65.0K following a decline of 92.0K in February. This would confirm the resilience of the labor sector and increase the likelihood that the Federal Reserve will maintain its current monetary policy for an extended period. However, expectations for further hawkish moves remain limited, as Federal Reserve Chair Jerome Powell stated earlier this week. Speaking at Harvard University, he noted that inflation expectations remain stable despite rising energy prices, meaning policymakers will continue to adopt a wait-and-see approach. Powell also emphasized that changes in monetary policy affect the economy with a lag, and tightening policy now would not mitigate inflationary effects related to the Middle East crisis. Additionally, Dallas Federal Reserve Bank President Lorie Logan recently stated that US producers are unlikely to increase oil output to shield consumers from rising gasoline prices. According to her, production expansion would require oil prices to remain around 70.0 dollars per barrel, which is currently below market levels. Analysts interpreted her comments as a signal that the recent upward trend may be temporary, while Logan also reaffirmed that the Fed should remain cautious under current conditions.
Eurozone
The euro is moderately strengthening against the yen and showing mixed dynamics against the pound and US dollar.
In the absence of major economic releases, currency movements are driven mainly by external factors. Bank of France Governor François Villeroy de Galhau stated that the next interest rate adjustment is likely to be upward, although it is still too early to discuss timing. He added that rising energy prices amid the US-Iran tensions are negatively affecting inflation dynamics in France and across the eurozone, although core inflation still meets European Central Bank requirements. However, prolongation of the conflict is rapidly worsening economic conditions, bringing the outlook closer to a negative scenario than the baseline forecasts.
United Kingdom
The pound is moderately strengthening against the yen and showing mixed dynamics against the euro and US dollar.
Investor activity is reduced today due to Good Friday. Market participants are focusing on the UK government’s announcement of a new pharmaceutical trade agreement with the United States, supplementing last year’s broader trade deal. The agreement requires the US to introduce zero tariffs on pharmaceutical exports from the UK for at least three years, although prices and development costs for new medicines are expected to increase. According to government data, pharmaceutical products account for roughly one-fifth of UK exports to the United States.
Japan
The yen is weakening against the euro and pound while showing mixed performance against the US dollar.
March services PMI data released today came in stronger than expected, declining from 53.8 to 53.4, compared to forecasts of 52.8. Previously released manufacturing data also improved from 51.4 to 51.6. These figures suggest ongoing economic recovery, which supports expectations of continued hawkish policy from the Bank of Japan. Board member Koji Nakamura confirmed that policy tightening remains possible if economic forecasts materialize. However, March inflation data from Tokyo raised doubts: the headline index declined from 1.5% to 1.4%, while core inflation dropped from 1.8% to 1.7%, remaining below the 2.0% target. Meanwhile, Finance Minister Satsuki Katayama warned that authorities are prepared to take action against excessive currency volatility.
Australia
The Australian dollar is moderately weakening against the euro and pound while showing mixed performance against the US dollar and yen.
The Australian government continues addressing energy shortages triggered by US-Iran tensions. Up to 90.0% of oil, gas, and fuel supplies are imported. Resources Minister Madeleine King stated that authorities are considering activating the Australian Domestic Gas Security Mechanism (ADGSM), which would require exporters to prioritize domestic supply. A decision is expected next month following consultations with major gas producers.
