Next Week in Forex: Risks and Macro Themes to Watch
As April winds down, the foreign exchange markets are bracing for a barrage of critical macro events that could shake up global risk sentiment and currency trends.
Canadian Elections: Volatility Without Direction
Canada’s national election kicks off the week, but FX traders should tread carefully. While volatility around CAD crosses is likely to spike, sustained directional moves may be elusive. A minority government outcome looks increasingly likely, which would leave fiscal and trade policy highly uncertain. Traders should be ready for whipsaw price action in USD/CAD, CAD/JPY, and EUR/CAD, rather than betting aggressively on immediate trends.
Canadian GDP: Resilience Breaks Down
Adding to CAD risks, next week’s Canadian GDP figures could confirm the end of the economy’s resilient streak. A softer print will likely amplify BoC rate cut bets and keep CAD pressured, especially if election outcomes cloud the policy outlook.
U.S. Nonfarm Payrolls and Inflation Test the Fed’s Resolve
Friday’s U.S. Nonfarm Payrolls (NFP) will be the first to fully capture the post-tariff environment after President Trump’s latest trade policy moves. Alongside Wednesday’s core PCE data—the Fed’s preferred inflation gauge—markets will get a sharper sense of whether the U.S. economy is still hot enough to fend off rate cuts. A softer labor market or inflation miss could revive USD bearish bets, while another hot print may embolden dollar bulls.
BoJ Policy Risks Growing
While Tokyo CPI surprised to the upside this month, the Bank of Japan is unlikely to shift gears at its Thursday meeting. The BoJ’s “patient hike bias” seems increasingly misplaced as global headwinds mount. JPY could stay under pressure if the BoJ maintains its ultra-dovish stance, keeping USD/JPY and JPY crosses bid in a risk-on environment.
China’s PMIs and Aussie Inflation: Asia in Focus
China’s PMI readings could offer early signs of growth slowdowns, a major risk for AUD and NZD. Meanwhile, Australia’s inflation data could challenge recent RBA pricing after a strong labor market print. A hot inflation surprise would spark volatility in AUD/USD and AUD/JPY.
Eurozone Data: More Support for ECB Doves
Eurozone CPI and GDP releases should confirm that Europe’s inflation challenge is starkly different from America’s. Weak inflation and sluggish growth will likely strengthen the ECB’s easing bias, weighing on the euro versus USD and other higher-yielders.
Next Week’s FX Takeaways:
Expect Canadian election volatility but no clear CAD trend yet.
U.S. jobs and inflation data will make or break the near-term USD story.
JPY remains vulnerable to dovish BoJ risks.
AUD and EUR sensitivity to data surprises will be critical for tactical setups.
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