Easter Lull Gives Way to Data Deluge: Dollar Faces a Three-Continent Stress Test

Easter Lull Gives Way to Data Deluge: Dollar Faces a Three-Continent Stress Test

Holiday Hangover: Thin Liquidity, Heavy Positioning

Markets opened Monday with limited participation due to Easter Monday closures in Europe, Australia, and parts of Asia. Dollar softness lingered from last week, but futures data shows long EUR and GBP positioning at its highest since mid-March. This setup could lead to sharp reversals or continuation rallies when liquidity returns Tuesday.

United States: PMIs, Housing and the Beige Book in Focus

Tuesday’s S&P Global flash PMIs (services expected at 54.4; manufacturing at 50.2) provide a first look at April activity. Durable goods (Thursday) and new home sales (Wednesday) will help clarify whether recent softness was tariff-driven or broader. The Fed’s Beige Book (Wednesday evening) will be scanned for wage and pricing signals post-tariffs. With multiple Fed speakers on deck (Harker, Hammack, Goolsbee), the narrative could shift from “cautious but not panicked.”

Trading Takeaway: A PMI beat plus improved sentiment could trigger profit-taking in crowded USD shorts. A miss could reignite rate cut bets and push yields lower.

Eurozone: Guindos and PMI Watch

ECB Vice President Luis de Guindos opens the week Tuesday, and any signal that inflation persistence remains a concern could drive EUR/USD above 1.1500. Wednesday’s composite PMI (expected just above 50) is pivotal—any downside would revive stagflation worries. Traders also await the ECB’s Consumer Inflation Expectations report Friday to assess tariff impact on price credibility.

United Kingdom: Retail Sales as Sterling’s Pivot

UK CPI and labor data are in the rearview; now, Friday’s retail sales (expected –0.3% m/m, +2.2% y/y) take center stage. A positive surprise could send GBP/USD through 1.3285 and toward 1.3325, while a miss could test the 1.3200 shelf. BoE Governor Bailey and three MPC members speak through Thursday—any resistance to easing expectations could fuel GBP’s rally.

Japan: Politics Over Calendar

Aside from Friday’s Tokyo CPI, Japan’s macro calendar is quiet. However, U.S.–Japan trade talks and speculation over BoJ tightening remain key. A soft CPI would keep USD/JPY in the 140.50–144.00 range, but a hot print may stir hawkish political commentary in Tokyo.

China and Broader Asia: Rates Steady, Sentiment Fragile

China’s one- and five-year loan prime rates remain unchanged (3.45% and 3.95%) for a sixth month. Attention now turns to weekend industrial profits and PMI data for signs of resilience against tariff drag. Australia has no top-tier releases, leaving AUD sensitive to global risk tone after its recent recovery.

Cross-Asset Implications

• Rates: Strong U.S. PMIs could lift 2-year Treasury yields above 4.50% and compress EUR/USD via spread narrowing.
• Equities: U.S. earnings continue with mega-cap tech. AI-related capex guidance will shape Nasdaq risk appetite.
• Commodities: Gold’s pullback from $3,357/oz may pause if real yields fall. Copper awaits China PMIs for directional cues.

Strategy Snapshot

Conclusion

The holiday-thinned Monday session offers little clarity. But by Wednesday, with flash PMIs from three continents, a new Beige Book, and ECB commentary, markets will face a wave of signals likely to reprice expectations across FX, rates, and commodities. Volatility is likely to expand midweek as fundamentals catch up with extreme positioning.