Markets eye Central Bank signals

European Markets

On Thursday, attention in Europe turned sharply to the European Central Bank’s policy announcement, where a 25-basis-point rate cut across all key rates is widely expected. The market will be closely listening to ECB President Christine Lagarde’s press conference, looking for clarity on the growth outlook for the Eurozone and how the central bank plans to navigate rising tariff tensions.

Meanwhile, German Producer Price Index (PPI) data for March surprised to the downside, showing a 0.2% year-over-year drop, below the expected +0.4%. On a monthly basis, prices fell 0.7%, driven largely by a steep decline in energy costs. Excluding energy, inflationary pressures were still visible in capital goods (+1.9% MoM), machinery (+2%), and food (+2.9%).

The drop in energy prices is being seen as a positive signal for German industry, which has struggled under high input costs in recent years. The softer inflation print also reinforces expectations of more accommodative monetary policy across the Eurozone.

U.S. Markets

Across the Atlantic, U.S. markets are awaiting the Philadelphia Fed Manufacturing Index, with forecasts pointing to a notable decline. Weekly jobless claims are expected to remain unchanged from last week, though any deviation will likely be seen through the lens of Fed Chair Jerome Powell’s latest comments.

Powell warned on Wednesday that the U.S. economy is facing two-sided risks—a scenario in which both slowing growth and persistent inflation could threaten the Fed’s dual mandate. He flagged the risk that both unemployment and inflation could drift away from equilibrium levels in 2025.

Investors remain cautious as policy uncertainty and trade tensions escalate, potentially limiting the Fed’s flexibility.

Currency Markets

The euro continued to trade lower, with EUR/USD slipping near 1.1350 in the European session. The move reflects both a resurgent U.S. dollar and a cautious tone ahead of the ECB’s rate decision and Lagarde’s speech.

Commodities

Oil prices rose modestly in early European trade, reflecting improved market sentiment around the possibility of renewed U.S.-China trade talks.

Gold meanwhile, pulled back slightly after hitting a new record high earlier in the session. A mild improvement in global risk sentiment and a firmer dollar led to some profit-taking, though downside appears limited.

The broader backdrop remains supportive for the precious metal: ongoing trade war risks, concerns over global growth, and expectations of further Fed easing continue to anchor gold’s safe-haven appeal, even if momentum pauses short term.