Global FX Market Summary: US-China Trade Relations, Key Economic Data, Potential Recession Risks 28 April 2025

US-China trade uncertainty, upcoming economic data, and concerns over global growth and recession risks impact market sentiment and central bank actions.

Uncertainty Surrounding US-China Trade Relations

The current market landscape is significantly shaped by the ambiguity and conflicting narratives surrounding trade negotiations between the United States and China. On one hand, statements from high-ranking US officials, including Treasury Secretary Scott Bessent and President Trump, have hinted at ongoing discussions and the possibility of reaching an agreement. Conversely, China’s Foreign Ministry has firmly denied any active engagement in trade talks, explicitly urging the US to cease what they perceive as misleading statements. The tangible consequences of the existing trade friction are evident in the tariffs imposed by the US on Chinese goods, which have, in turn, led to price increases for US consumers by Chinese e-retailers. This backdrop of uncertainty directly influences market sentiment, contributing to a cautious trading environment and hindering the US Dollar’s ability to establish a strong upward trajectory against other currencies.

Anticipation of Key Economic Data and Central Bank Actions

A pivotal theme across the financial markets is the keen anticipation of upcoming crucial economic data releases and the subsequent actions of major central banks. This week is particularly significant, with both the United States and the Eurozone scheduled to publish key figures pertaining to inflation, employment, and economic growth. For the US, investors are bracing for the release of the first-quarter Gross Domestic Product (GDP), the April Nonfarm Payrolls (NFP) report, and the Core Personal Consumption Expenditures (PCE) Price Index. Similarly, the Eurozone will unveil its flash Harmonized Index of Consumer Prices (HICP) for April alongside its Q1 GDP data. These economic indicators are being closely scrutinized as they will likely shape expectations regarding future monetary policy decisions, particularly concerning potential interest rate adjustments by the Federal Reserve (Fed) and the European Central Bank (ECB). Current market expectations already factor in a notable degree of monetary easing by the Fed throughout the remainder of the year, while ECB policymakers have signaled a growing inclination towards implementing an initial interest rate cut in June, contingent on the signals provided by the forthcoming inflation data.

Concerns about Global Economic Growth and Potential Recession Risks

Underlying the immediate market movements is a growing sense of unease regarding the overall health and future prospects of the global economy. This apprehension is partly fueled by the ongoing trade tensions and the anticipated detrimental effects of tariffs on international commerce and economic activity. Analysts at Standard Chartered have expressed skepticism about the notion that US trade policies will lead to a reduction in global tariffs, instead cautioning about a prolonged period of instability that could negatively impact global growth. Adding to these concerns, a recent Reuters poll indicated a heightened probability of the global economy entering a recession. Market signals, such as the decline in US Treasury yields and real yields, further suggest that investors are increasingly worried about the potential for an economic downturn in the United States. Even within the Eurozone, ECB policymaker Klaas Knot has voiced concerns that the US tariff policy could dampen demand and contribute to disinflation in the near term, underscoring the interconnectedness of global economic risks.

Top economic events for this week:

1. April 30, 2025 – 01:30:00 – Consumer Price Index (QoQ) (AUD) – HIGH: This release provides a key measure of inflation in Australia on a quarter-over-quarter basis. High inflation figures could prompt the Reserve Bank of Australia (RBA) to consider tightening monetary policy, impacting the Australian Dollar and overall economic outlook for the country.
2. April 30, 2025 – 01:30:00 – Monthly Consumer Price Index (YoY) (AUD) – HIGH: This is another critical inflation indicator for Australia, showing the year-over-year change in consumer prices on a monthly basis. A high reading would reinforce concerns about inflation and potentially influence RBA decisions and the value of the AUD.
3. April 30, 2025 – 01:30:00 – RBA Trimmed Mean CPI (QoQ) (AUD) – HIGH: The trimmed mean CPI is a core inflation measure that excludes the most volatile price changes. This makes it a key indicator for the RBA to gauge underlying inflation pressures. A high reading here would be significant for monetary policy considerations.
4. April 30, 2025 – 01:30:00 – RBA Trimmed Mean CPI (YoY) (AUD) – HIGH: Similar to the QoQ figure, this year-over-year trimmed mean CPI provides a view of sustained underlying inflation in Australia. It’s a crucial data point for assessing the effectiveness of current monetary policy and potential future adjustments.
5. April 30, 2025 – 01:30:00 – NBS Manufacturing PMI (CNY) – HIGH: The National Bureau of Statistics (NBS) Manufacturing Purchasing Managers’ Index (PMI) is a vital gauge of manufacturing activity in China, a major global economic engine. A high reading indicates expansion in the sector, while a low reading suggests contraction, impacting global markets and sentiment.
6. April 30, 2025 – 01:30:00 – NBS Non-Manufacturing PMI (CNY) – HIGH: This index reflects the health of China’s services and construction sectors. As China’s economy rebalances, the non-manufacturing PMI has become increasingly important. Strong growth here can offset weakness in manufacturing and vice versa, influencing the CNY and global growth expectations.
7. April 30, 2025 – 01:45:00 – Caixin Manufacturing PMI (CNY) – HIGH: The Caixin Manufacturing PMI is an independent survey focusing more on small and medium-sized private sector manufacturers in China. It provides a complementary view to the official NBS PMI and can offer deeper insights into specific segments of the Chinese manufacturing economy.
8. April 30, 2025 – 06:00:00 – Gross Domestic Product (QoQ) (EUR) – HIGH: This is a key measure of the Eurozone’s economic growth on a quarter-over-quarter basis. A strong GDP figure can boost confidence and potentially lead to tighter monetary policy by the European Central Bank (ECB), strengthening the Euro. Conversely, weak growth can have the opposite effect.
9. April 30, 2025 – 06:00:00 – Gross Domestic Product (YoY) (EUR) – HIGH: This release shows the year-over-year change in the Eurozone’s GDP, providing a longer-term perspective on economic performance. It’s a crucial indicator for assessing the overall health and trajectory of the Eurozone economy.
10. May 02, 2025 – 12:30:00 – Nonfarm Payrolls (USD) – HIGH: This report from the United States Bureau of Labor Statistics provides a comprehensive snapshot of the change in the number of employed people during the previous month, excluding the farming sector. It is one of the most closely watched economic indicators globally, as it reflects the health of the US labor market, influencing Federal Reserve policy decisions and the value of the US Dollar.

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