Tariffs and Tension: High-Stakes Data Week Shapes Forex Outlook
Introduction
The trading week starting March 10, 2025, could send ripples through financial markets on the back of new U.S. inflation numbers, key UK growth data, and ongoing anxiety around President Donald Trump’s tariff policy. With last week’s U.S. jobs report showing slower payroll growth and the Federal Reserve signaling patience on further rate adjustments, traders are seeking fresh catalysts to define currency trends. The euro, sterling, and dollar all face potential volatility as economic indicators trickle in—especially if geopolitical headlines add a layer of unpredictability.
1. UK Data Kicks Off: Retail Sales Monitor (Tuesday, Mar 11)
What to Watch: The British Retail Consortium’s (BRC) Retail Sales Monitor for February is forecasted at 2.4% year-on-year, just under the previous 2.5%. While this figure doesn’t typically rock the market on its own, it’s a useful gauge of consumer spending amid cost-of-living pressures.
Sterling Reaction: A miss on the data might pressure GBP/USD, particularly if broader risk sentiment tilts dollar-friendly. Conversely, a better-than-expected print could give the pound modest support, especially if the euro and dollar lack new momentum.
2. U.S. JOLTS: Job Market Barometer (Tuesday, Mar 11)
Why It Matters: The Job Openings and Labor Turnover Survey (JOLTS) is projected to come in at 7.71 million, reflecting ongoing labor market tightness. After February’s nonfarm payrolls disappointed slightly, a robust JOLTS could reaffirm that demand for workers remains strong.
USD Implications: Should job openings outpace expectations, the dollar might firm as traders contemplate the Fed’s reluctance to cut rates aggressively if the labor market stays resilient.
3. Center Stage: U.S. CPI (Wednesday, Mar 12)
Details: The market expects monthly CPI at +0.3%, with annual inflation dipping slightly to 2.9% (from 3.0%). Core inflation (excluding food and energy) is seen holding at 3.2% year-on-year, a level well above the Fed’s 2% target.
- Higher-Than-Expected: A “hot” print could reignite bets on the Federal Reserve maintaining a tighter policy stance longer into 2025.
- Tame CPI: Weaker price growth could heighten speculation that the Fed may pivot more dovish, prompting a USD retreat.
4. The Trump Tariff Factor
Markets remain on edge about the administration’s new or impending tariffs targeting steel, aluminum, and possibly goods from Canada, Mexico, or Europe.
- Dollar Strength? In periods of high global uncertainty, the greenback often benefits from safe-haven flows.
- Or Weakness? If tariffs risk slowing the U.S. economy by raising import costs, the Fed could eventually respond with rate cuts, weighing on the dollar.
5. Friday’s Data Rush: UK GDP and U.S. Sentiment
UK GDP (Mar 14): Forecasts show a modest 0.1% monthly expansion for January (1.2% year-on-year). A strong print could boost GBP/USD, while a weak reading might exacerbate pound selling.
Michigan Consumer Sentiment (U.S.): Projected to rise to 64. A brightening consumer outlook could bolster the dollar, reinforcing the notion that the U.S. economy remains comparatively stable.
6. Fed on the Sidelines, But for How Long?
With the central bank in its blackout period ahead of the March 19 meeting, official speeches are off the table. The U.S. CPI reading thus takes on extra significance, as markets attempt to read the Fed’s stance indirectly.
7. Watch the Euro’s Reaction
The euro soared last week on Germany’s proposed infrastructure spending and better-than-expected Q4 GDP revisions, but any negative trade developments could see EUR/USD fluctuate sharply.
8. Conclusion
From the UK’s consumer trends to U.S. inflation data and renewed tariff intrigue, this week is set to test the resilience of major currencies. Economic fundamentals and trade rhetoric will likely drive volatility into the latter half of March.
