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Markets enter the week facing a critical transition—from pricing geopolitical risk to measuring its economic impact—with US CPI set to test the Federal Reserve’s policy path. With Brent crude holding above $100 through most of March following escalation in Iran conflict, upcoming data will act as a litmus test for second-round inflation effects.

The core question is no longer whether energy prices are rising, but whether those costs are feeding into broader prices, wages, and policy expectations, which is broadening enough to force a Fed rate hike later in the year.

This marks a shift from “speculation” to “quantification”. Markets have already repriced stagflation risk, but have yet to fully price a sustained inflation regime driven by supply disruption. This week’s releases will determine whether that repricing accelerates—or stalls.

The High-Stakes Events:

US CPI and ISM: From Energy Shock to Core Inflation

In the US, focus centers on CPI on Friday, alongside ISM Services PMI and FOMC minutes earlier in the week. CPI is the decisive event. Markets will look beyond headline inflation to core and services components, where evidence of pass-through from energy costs would confirm that inflation is broadening. A simultaneous pickup in both would signal that transport and input cost pressures are feeding into final consumer prices—solidifying the stagflation narrative and effectively removing near-term Fed easing from the table.

ISM Services PMI will offer an earlier read on inflation dynamics. The Prices Paid sub-index will be key for gauging cost pressures, while new orders will indicate whether demand is holding up or beginning to crack under rising prices. Together, these components will provide the more signals of whether the economy is absorbing or resisting the energy shock.

FOMC Minutes vs CPI: Sentiment vs Reality

FOMC minutes on Wednesday come before CPI, creating a crucial sequencing dynamic. The minutes reflect policymakers’ thinking at the March 17–18 meeting—effectively a snapshot of early reactions to the oil shock. While the policy statement at that time was a "wait and see," the minutes will reveal the intensity of the internal debate regarding the Iran War and the subsequent oil shock.

• The Dovish View: Look for phrases like "participants noted the tendency to look through supply-side shocks" or "energy price increases were viewed as likely to be transitory." This would signal that the Fed is staying the course on eventual rate cuts.
• The Hawkish Shift: Watch for concerns about "second-round effects" or "inflation expectations becoming unanchored." If officials express worry that high energy prices are bleeding into services and wages, it suggests they may hold rates steady for the rest of 2026—or even discuss hikes.

If the minutes show rising concern on inflation, and CPI then confirms a broad-based pickup, markets could be forced into an aggressive repricing of the Fed path. In that scenario, higher-for-longer expectations would be reinforced sharply, potentially driving a strong Dollar rally alongside renewed upward pressure on yields.

Canada Jobs: Energy Boom or Growth Drag?

Canada’s employment report on Friday will test whether elevated energy prices are supporting or undermining the domestic economy. After recent job losses earlier in 2026, the key question is whether the oil-driven boost is feeding into hiring, particularly in resource sectors.

However, composition matters as much as the headline. Gains concentrated in energy extraction alongside losses in manufacturing would reinforce the Bank of Canada’s policy dilemma—inflation lifted by energy, but growth constrained elsewhere. This keeps the BoC sidelined, with policy likely on hold unless a broad-based labor market recovery emerges.

The Silient Mover:

RBNZ Decision: Hawkish Hold Signals Shift in Risk

The Reserve Bank of New Zealand is expected to leave the OCR unchanged at 2.25% on Wednesday, but the tone will be closely watched. Recent guidance from Governor Anna Breman suggests a shift toward a hawkish pause, acknowledging that while initial energy shocks can be overlooked, second-round effects cannot.

Particularly important is the rise in inflation expectations toward 4.1% for mid-2026, signaling early signs of de-anchoring. This has already prompted markets to price in the possibility of rate hikes later in the year, even as near-term growth remains soft.

Highlights for the week:

Monday, Apr 6, 2026

Tuesday, Apr 7, 2026

Wednesday, Apr 8, 2026

Thursday, Apr 9, 2026

Friday, Apr 10, 2026

The March Non-Farm Payrolls (NFP) report just dropped into a ghost town but came with a major surprise: +178K vs 60K expectations.

This completely erases the prior month's -92K release (which did get revised down to -133K – But even this got overshaded by today's release

This led to a drop in the Unemployment rate to 4.3% (from 4.4%) with the unrounded number at 4.256%

With major US equity and commodity markets fully closed for Good Friday, only Futures are opened and they are quite stuck, in an abbreviated holiday session (Open until 13:30 ET), Wall Street is left holding a massive data release with almost nowhere to trade it.

US Stock Futures and Bonds still sold off as the data pushes back against Cuts even further, as if they were even part of the discussion – The US Dollar is up slightly but its change is measly.

As the economy really seems to be picking up again, traders will have to remain careful on the possible pricing for hikes – That will have to be seen again in the next few months, as the data will progressively reflect higher energy costs.

(Gas prices have been out of this world to be fair – This will weigh on activity).

Stock Futures are selling off

Dow Jones 1H Chart. April 3, 2026 – Source: TradingView

Some algos lost their minds at the release but this did not last long – Stocks remain below their bearish trendline.

Bonds follow suit

Bonds 1H Chart. April 3, 2026 – Source: TradingView

Happy Holidays and enjoy the long weekend!

Things could get very wild at the Monday re-open but could only really pick up on Tuesday, with the heaviest participants only coming back at that time

The Middle East conflict is weighing on gold prices amid expectations that central banks will raise interest rates to address rising inflation driven by oil prices. This seems like a knee-jerk reaction, as this is precisely how central banks acted in 2022. Moreover, it is widely acknowledged that this was a belated response. Another factor working against gold is the reduction in gold purchases, as well as the sale of gold from reserves to support national currencies, as India and Turkey have been doing recently. It is possible that many others are doing the same, but we are not yet aware.

This is a rather short-sighted approach, as current fuel prices are a shock to consumers, and this will be followed by a shock to the economy, requiring monetary policy to be eased, not tightened. However, we first need to hear that central banks share this view; for now, they remain focused on inflation.

Among the medium-term price targets, $4,200 remains significant. A fall in the price of gold to this level would still be within the uptrend. A break below this level would signal a reversal of the three-year uptrend. A rebound from this level would keep alive the hope that the bullish trend in gold is not yet over.

From a technical analysis perspective, last week, gold may have found support at the 200-day MA during its decline to $4,100. Strong buying continued right up until Thursday morning, when the price touched $4,800. The subsequent dip following Trump’s hawkish rhetoric did not trigger a fresh wave of selling in gold, keeping hopes alive for a return to the bullish trend.

It is quite possible that gold will test the 50-day MA near $5,000 once again next week, finally shaking off oversold conditions. This suggests a positive outlook for next week, but we remain cautiously pessimistic over the longer term, anticipating a decline to $4,200 in the medium term and a low of $3,300 for the bearish cycle we are already in.

Nonfarm payrolls rose by 178k in March, well ahead of the consensus forecast calling for a gain of 65k. Revisions to the two prior months subtracted a total of 7k from the previously reported figures.

• Smoothing through the volatility, nonfarm payrolls averaged 68k per-month over the last three months or slightly above the breakeven rate of 30k-50k.

Private payrolls rose by an impressive 186k – its strongest monthly gain since December 2024 – following a decline of 129k in February. The bulk of the gains were concentrated in health care & social assistance (+89.9k), construction (+26k) and transportation & warehousing (+21K), though a number of other industries also added jobs on the month. Meanwhile, the federal government shed 18k jobs.

In the household survey, the labor force plummeted (-396k) by considerably more than civilian employment (-64k), pushing the unemployment rate down a tick to 4.3%. The labor force participation rate fell to 61.9% (from 62.0% the month prior), which is its lowest level since late-2021.

Average hourly earnings (AHE) rose 0.2% month-on-month (m/m), or roughly half the gain seen in February. On a twelve-month basis, AHE ticked down to 3.5% (from 3.8%).

Key Implications

Payrolls surprised to the upside in March, handily beating expectations but also more than reversing February's pullback which was impacted by strike and weather-related effects. Encouragingly, the breadth of hiring widened to its highest level since December 2023, suggesting it wasn't only a reversal of February effects driving last month's gains.

This morning's report will come as welcome news for policymakers as it helps to assuage any fear that may have arisen following February's weak employment report. Stability in the labor market should allow policymakers to sit tight and better assess the economic impacts stemming from higher oil prices over the coming months. While we still see a path for a few more rate cuts later this year, the window could be narrowing, especially if March's strength in the labor market were to persist and oil prices were to remain elevated.

US labor market showed strong resilience in March, with non-farm payrolls rising 178k, far above expectations of 48k. The solid gain more than offset the downward revision in February, which was revised from -92k to -133k, while January’s figure was revised higher from 126k to 160k, reinforcing a volatile hiring trend.

The unemployment rate fell from 4.4% to 4.3%, beating expectations, although the participation rate edged lower from 62.0% to 61.9%, suggesting part of the decline was driven by a smaller labor force.

However, wage dynamics were softer than expected. Average hourly earnings rose 0.2% mom, below the 0.3% forecast, with annual growth at 3.5% yoy.

Full US non-farm payroll release here.

AUDJPY: ⬆️ Buy

• AUDJPY reversed from support zone
• Likely to rise to resistance level 111.00

AUDJPY currency pair recently reversed up from the support zone between support level 109.00, lower daily Bollinger Band and the 38.2% Fibonacci correction of the upward impulse from December.

The upward reversal from the support level 109.00 created the daily Japanese candlesticks reversal pattern Morning Star, highlighted below.

Given the strong daily uptrend, AUDJPY currency pair can be expected to rise to the next resistance level 111.00.

CHFJPY: ⬆️ Buy

• CHFJPY reversed from support zone
• Likely to rise to resistance level 202.00

CHFJPY currency pair recently reversed up from the support area located between support level 198.00 (former resistance from December, which has been reversing the pair for the last 3 months), lower daily Bollinger Band and the 50% Fibonacci correction of the upward impulse from December.

The upward reversal from the support level 109.00 created the daily Japanese candlesticks reversal pattern Bullish Engulfing.

Given the prevailing daily uptrend, CHFJPY currency pair can be expected to rise to the next resistance level 202.00 (top of earlier wave B).

WTI Crude Oil: ⬆️ Buy

• WTI Crude Oil broke round resistance level 100.00
• Likely to rise to resistance level 113.00

WTI Crude Oil recently broke above the round resistance level 100.00, which reversed the price multiple times in March as can be seen below

The breakout of the resistance level 100.00 continues the active short-term impulse wave 3 of the intermediate impulse wave (3) from last month.

Given the strong daily uptrend, WTI Crude Oil can be expected to rise to the next resistance level 113.00 (which stopped the previous sharp impulse wave (3)).

GBP/USD stabilised around 1.3227 on Friday following a sharp decline the previous day. Rising geopolitical tensions have weighed on the pound following fresh statements from US President Donald Trump. Increased military rhetoric towards Iran and the lack of clarity regarding the reopening of the Strait of Hormuz have led to a jump in oil prices and heightened demand for the US dollar as a safe-haven asset.

Additional pressure on the pound stems from the UK's heavy reliance on energy imports and concerns about public finances. Yields on British government bonds have risen in tandem with energy prices, adding further strain on the currency.

Overall, market dynamics are unfolding in accordance with a classic risk-off scenario. Rising oil prices and heightened geopolitical risks are weighing on most assets, while the US dollar remains the key safe-haven currency.

Sterling had already fallen approximately 1.9% against the dollar in March amid fears of an energy shock.

Technical Analysis

On the H4 GBP/USD chart, the market is forming a broad consolidation range around the 1.3250 level, currently extending down to 1.3180. A short-term move towards 1.3250 is expected. Following the completion of this correction, a new consolidation range is likely to form. An upside breakout would open the way for a continuation move to 1.3300, while a downside breakout would suggest further movement to 1.3100. Technically, this scenario is confirmed by the MACD indicator, with its signal line below zero and pointing firmly downwards.

On the H1 chart, the market has formed a compact consolidation range around 1.3254. A downside breakout has initiated a wave structure extending to 1.3100. Should this level be breached, further downside potential towards 1.3050 would emerge. Conversely, an upside breakout from the range may trigger a rebound to 1.3300. Technically, this scenario is confirmed by the Stochastic oscillator, with its signal line below 50 and pointing downwards.

Conclusion

GBP/USD remains under sustained pressure as President Trump's escalated military rhetoric towards Iran and the unresolved status of the Strait of Hormuz drive oil prices higher, bolstering safe-haven demand for the US dollar. The UK's energy import dependence and fragile public finances leave sterling particularly vulnerable in this risk-off environment. Having already lost nearly 2% in March, the pound faces continued headwinds, with technical indicators pointing to further downside potential. Near-term stabilisation is possible, but any sustained recovery would likely require a tangible de-escalation in geopolitical tensions or a shift in broader risk sentiment.