Introduction

The week commencing March 24, 2025, packs a punch, featuring pivotal PMIs across major economies, midweek updates on U.S. durable goods and UK inflation, and a potentially market-moving Friday that includes UK retail sales and the Federal Reserve’s preferred inflation measure. Layered on top are lingering worries over possible tariff actions by the U.S. administration, which could reverberate through global supply chains. This article dissects the key indicators and outlines how they may sway currency pairs, bond yields, and equity indexes over the coming days.

1. Monday’s PMI Frenzy: Eurozone, UK, and U.S.

1. Eurozone (HCOB)
   • Projected: Manufacturing at 48.0, Services at 51.0.
   • Importance: Any reading below 50 suggests contraction, so the manufacturing figure remains a concern. A deeper drop might pressure the euro, whereas resilience above 47.5 could provide a slight reprieve.
2. UK (S&P Global)

• Forecast: 47.3 for manufacturing and 51.2 for services.
• Sterling Watch: If both PMIs outperform, the pound may catch a bid as investors see potential for the Bank of England to remain cautious but open to small future rate increases. However, a disappointment might prompt rethinking BoE policy timelines.

1. U.S. (ISM & S&P)

• Why It Matters: The U.S. data often sets the tone for broader market sentiment, as a robust showing can cement the dollar’s advantage if interest rate concerns linger.

2. Midweek Double Header: U.S. Durable Goods and UK Inflation (Wednesday, Mar 26)

1. U.S. Durable Goods Orders
   • Predicted: A -0.7% reading, hinting at weaker corporate investment.
   • Dollar Dynamics: A bigger decline could challenge the greenback if it signals that high interest rates are stalling business spending. Yet if consumer demand remains robust, the net effect on the dollar might be muted.
2. UK Inflation Rate (YoY)

• Estimate: Edging down to 2.9% from 3%.
• Market Response: A surprise upside figure might fuel speculation that the BoE can’t pivot to cuts soon, bolstering GBP. A sharper drop, though, would stoke speculation of a more dovish BoE—potentially weighing on sterling.

3. Friday’s Grand Finale: UK Retail Sales and U.S. Core PCE

1. UK Retail Sales (MoM)
   • Looking For: A bounce to +1.7% after a -0.3% fall previously.
   • Sterling Impact: Strong data could offset any inflation disappointment earlier in the week, suggesting consumers remain resilient. Weak data, however, might reinforce negativity if inflation is also trending down, implying less impetus for further rate hikes.
2. U.S. Core PCE Price Index (YoY)

• Forecast: 2.8%, unchanged from last month.
• Why It’s Key: Core PCE is the Fed’s preferred measure of inflation. Any upside above 2.8% might solidify the argument for keeping rates elevated, boosting the dollar. A downside surprise could feed into the “Fed pivot” narrative, possibly weakening the greenback and lifting equities.

4. Underlying Tension: Possible Tariffs & Geopolitics

While data hogs the headlines, markets remain on tenterhooks over trade policy. President Donald Trump’s final decision regarding reciprocal tariffs on various imports looms in early April:

• FX & Commodity Impact:
  • Dollar: Tends to strengthen in times of global angst. But if new tariffs inflict self-harm on the U.S. economy, the greenback might suffer later.
  • Commodity Currencies (AUD, NZD): Vulnerable if China or other major trade partners face heavier U.S. tariffs, dampening global risk appetite.

5. Central Bank Crosswinds

Though no major rate announcements are scheduled this week, central bank commentary can still surprise:

• Federal Reserve: In partial blackout after last week’s flurry of statements. Investors parse each piece of data for clues on the next rate move, focusing on whether inflation is sticky enough to deter cuts.
• Bank of England: Governor Andrew Bailey speaks Monday evening, possibly giving updated views on the economy. Any hawkish hints might cushion GBP, but emphasis on mounting fiscal and cost-of-living strains could see sterling retreat.
• ECB & Others: Euro watchers remain attentive to the possibility that better data could embolden hawkish voices, though the Eurozone’s manufacturing slowdown complicates that narrative.

6. Potential Market Scenarios

• Euro Breaks Lower: If Eurozone PMIs disappoint and the German economy shows signs of stalling, EUR/USD may test recent support around 1.08 or lower, especially if U.S. data remains robust.
• Pound Resilience or Retreat: The pound could whipsaw on inflation plus retail sales. A bigger-than-expected jump in either might see GBP/USD aim above 1.30, while a dismal combination might push it down to the mid-1.27s (200-day moving average).
• Dollar’s Moment of Truth: If U.S. data—particularly core PCE—keeps pointing to sticky inflation, the greenback could reaffirm its safe-haven status. If inflation cools notably, markets might anticipate earlier Fed cuts, dampening the dollar’s yield advantage.

7. Beyond the Data

• Equities: Stocks will follow the lead of economic releases. Negative trade headlines or subpar PMIs could reignite sell-offs, while constructive data or easing tariff threats might prompt a relief rally.
• Bond Yields: Sensitive to any sign of weakening growth. A bigger slump in durable goods could push yields lower if it implies a cautious Fed stance. Meanwhile, strong data or sticky inflation might keep yields elevated.

Conclusion

With pivotal data releases each day, the week of March 24 has the potential to drastically alter market sentiment heading into the end of Q1. Eurozone PMIs will show whether the region is escaping recession, while UK inflation and retail sales decide sterling’s near-term direction. Meanwhile, in the U.S., durable goods and especially core PCE form the backbone of Fed watchers’ outlook, as lingering tariff threats cast a long shadow over global trade. As each data point lands, expect quick reactions across currencies, equities, and bonds—and be prepared for abrupt pivots if policymakers or trade developments shift the landscape.

Ultimately, the interplay between macro fundamentals and potential tariffs means caution is warranted. A single positive or negative surprise could reverberate through multiple asset classes, reminding traders that in 2025’s fluid environment, agility and real-time analysis remain paramount.