Last week’s US GDP update showed a slightly better reading on Thursday but growth in US GDP fell from above 3% to 2.4% in Q4 and is expected to contract by nearly 3% in Q1 according to the latest update from Atlanta Fed’s GDP Now forecast.

The core PCE, on the other hand, advanced to 2.8% instead of a steady 2.7% read expected by analysts. And the University of Michigan’s inflation expectations keep rising while sentiment keeps dropping. In summary, the US data hints at slowing economy and rising inflationary pressures. That’s the worst possible combination for risk sentiment.

Good news is that the Federal Reserve (Fed) doves are not going away with higher inflation numbers as the rapid fall in growth figures look more concerning than the inflation pick up. Therefore the Fed is expected to cut the rates in June – despite unideal trend in inflationary pressures – with more than 80% probability. The pricing in the bond markets tell the same story. The US 2-year yield – that best captures the Fed rate expectations - dropped below 4% last week and has settled near 3.85% this morning.

Alas, even the falling yields and the rising dovish Fed expectations are unable to give a smile to investors. The S&P500 lost nearly 2% yesterday and is set to end the month with more than 6% losses – while seasonally speaking, March could’ve been a good month.

Nasdaq 100 was hit by a 2.60% selloff. CoreWeave – the Nvidia-backed cloud computing company specialized in AI – had quite a disappointing debut on Nasdaq. The Dow Jones, small and mid-cap indices all traded down between 1.5 and 2% as well.

Stocks in Europe returned to the lowest levels in two weeks, as gold continued to advance towards fresh high, the price of an ounce is trading above the $3110 mark this morning as the selloff continues in Asia with Nikkei down 1.5% on Monday despite data pointing at a 2.5% jump in industrial production in February and the CSI 300 is down 1% at the time of writing despite a set of better than expected PMI numbers.

Oil, on the other hand, is down this morning despite Donald Trump being ‘pissed off with Putin’ for suggesting ways to install new leadership in Ukraine by sidelining President Zelensky – a situation that could lead to ‘secondary tariffs’ on Russian oil. Alas, oil bulls are unable to rebound on the news this morning. Last week’s failure to clear the $70pb resistance is now leading to a toppish sentiment, and the latter is reinforced by gloomy growth expectations and OPEC+ plans to start restoring production from next month.

In the FX, the US dollar reversed an attempt to rebound from the March dip and is down for the third session on mediocre growth expectations for the US economy. The EURUSD found support near its 200-DMA last week. Released last Friday, the French and Spanish early inflation figures for March came in softer than expected, providing more room for the European Central Bank (ECB) to stay accommodative to support growth. The euro’s appreciation and the weakening energy prices are also supportive of European growth.

Speaking of growth, the British GDP update surprised to the upside on Friday giving Cable an additional reason to stay strong against the US dollar, though sterling remains offered against the euro.

In summary, the euro is looking stronger than sterling and the dollar, while the US dollar has become the weakest link among the three.

This week, investors will continue to watch the Eurozone inflation numbers and the US jobs data. The expectations are weak. If the Liberation Day doesn’t lead to a relief rebound in the US dollar, the euro could make an attempt above the 1.10 mark against the dollar, and Cable could break the back of the 1.30 offers.