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Author: The Forex Feed
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Dow Jones backslides on trade war rhetoric
- The Dow Jones shed 400 points on Thursday, falling 1.45%.
- US PPI inflation hit a soft patch, further easing fears of an inflation reignition.
- Despite easing price pressures, equities still took a hit as Trump threatens more tariffs.
The Dow Jones Industrial Average (DJIA) fell some 400 points on Thursday, declining around one full percent after United States (US) President Donald Trump and his administration ramped up their trade war rhetoric. President Trump pivoted to threatening new tariffs on targeted goods from the European Union after his tactic of trying to strong-arm Canada into making trade concessions went nowhere earlier this week.
The US Producer Price Index (PPI) cooled faster than expected in February, with core PPI inflation easing to 3.4% YoY versus the expected print of 3.5% and January’s 3.6%. Headline PPI inflation also chilled, falling to 3.2% on an annualized basis compared to the forecast of 3.3%, however January’s headline PPI print was revised higher to 3.7% as revisions continue to be a thorn in the side of preliminary data watchers.
Despite a general easing in this week’s batch of inflation data, the odds of another rate cut from the Federal Reserve (Fed) next week look slim. Inflation metrics are still running well above the Fed’s 2% annual target, and according to the CME’s FedWatch Tool, rate markets are pricing in functionally 100% odds of the Fed holding rates steady after its rate call meeting next week. Rate traders expect the Fed’s next move on rates to be in June, if not later.
US President Donald Trump hit the ground running on Thursday, vowing to impose a stiff 200% tariff on European wines if the EU doesn’t back off from its 50% tariff on US-produced whisky, which was imposed as a retaliatory measure against the US’s global 25% steel and aluminum tariff that went into effect this week. President Trump attempted to strong-arm his Canadian neighbors into not retaliating against his steel import fees.
However, those measures largely fizzled and resulted in no concessions from Canada, and now the Trump administration is shifting its tit-for-tat tariff strategy on Europe. Donald Trump also returned to musing about ‘taking’ Greenland from Denmark as the US president revisits talking points from his campaign trail.
Dow Jones news
A large majority of the stocks listed on the Dow Jones fell back on Thursday, with two-thirds of the index’s securities slipping into the red. Verizon (VZ) rebounded 2.5% to above $43 per share as the telecoms giant recovers from a rout earlier this week. Salesforce (CRM) and Home Depot (HD) both fell over 4%, falling to $271 per share and below $350 per share, respectively. Tech stocks and building suppliers are growing increasingly uneasy in the face of the Trump administration’s trade policies.
Dow Jones price forecast
Losses are beginning to accumulate on the Dow Jones Industrial Average chart, dragging the major equity index into correction territory with the Dow Jones down 2,000 points on the week. The DJIA has shed nearly 10% from last November’s record highs just north of 45,000, and price action is back below the 41,000 handle for the first time in 6 months.
Dow Jones 4-hour chart
Tariffs FAQs
Tariffs are customs duties levied on certain merchandise imports or a category of products. Tariffs are designed to help local producers and manufacturers be more competitive in the market by providing a price advantage over similar goods that can be imported. Tariffs are widely used as tools of protectionism, along with trade barriers and import quotas.
Although tariffs and taxes both generate government revenue to fund public goods and services, they have several distinctions. Tariffs are prepaid at the port of entry, while taxes are paid at the time of purchase. Taxes are imposed on individual taxpayers and businesses, while tariffs are paid by importers.
There are two schools of thought among economists regarding the usage of tariffs. While some argue that tariffs are necessary to protect domestic industries and address trade imbalances, others see them as a harmful tool that could potentially drive prices higher over the long term and lead to a damaging trade war by encouraging tit-for-tat tariffs.
During the run-up to the presidential election in November 2024, Donald Trump made it clear that he intends to use tariffs to support the US economy and American producers. In 2024, Mexico, China and Canada accounted for 42% of total US imports. In this period, Mexico stood out as the top exporter with $466.6 billion, according to the US Census Bureau. Hence, Trump wants to focus on these three nations when imposing tariffs. He also plans to use the revenue generated through tariffs to lower personal income taxes.
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Greenback Strengthens as Euro Pulls Back and US-EU Trade Tensions Escalate
Dollar is staging a notable rebound as markets transition into US session, though the exact catalyst behind the move is unclear. Part of Dollar’s strength could be attributed to a broad pullback in Euro, as traders begin to take profits after this month’s strong gain. Euro’s retreat is providing the greenback with some temporary relief. However, broader geopolitical and trade tensions may also be influencing the market’s cautious sentiment.
Trade tensions between the U.S. and Europe continue to escalate following fresh threats from US President Donald Trump. In response to the EU’s plan to impose retaliatory tariffs on American whiskey, Trump warned of a potential 200% tariff on European wine, champagne, and spirits. This marks an escalation in the ongoing trade dispute that began with Washington’s 25% tariffs on steel and aluminum imports.
At the same time, geopolitical uncertainties are deepening as U.S. officials arrive in Moscow for ceasefire discussions over the Ukraine conflict. Russia appears to be taking a hardline stance, with Presidential Aide Yuri Ushakov dismissing the proposed truce as nothing more than a temporary reprieve for Ukraine’s military. Ushakov emphasized that Russia’s ultimate objective remains a long-term peace settlement that prioritizes its own national interests. This rigid position suggests that negotiations may not yield immediate breakthroughs.
Against this backdrop, Dollar is emerging as the strongest performer of the day, followed by Yen and Loonie. On the other hand, Kiwi is currently the weakest performer, followed by Aussie and Euro. Sterling and the Swiss Franc are positioned in the middle.
Technically, though, it’s way too early to conclude that Dollar is reversing its near term down trend. For example, USD/CHF’s recovery from 0.8757 is seen as a corrective pattern that should be limited below 0.8911 support turned resistance. Fall from 0.9200 is still expected to resume at a later stage.
In Europe, at the time of writing, FTSE is up 0.07%. DAX is down -0.49%. CAC is down -0.33%. UK 10-year yield is up 0.018 at 4.698. Germany 10-year yield is flat at 2.882. Earlier in Asia, Nikkei fell 0.08%. Hong Kong HSI fell -0.58%. China Shanghai SSE fell -0.39%. Singapore Strait Times rose 0.12%. Japan 10-year JGB yield rose 0.023 to 1.547.
US PPI at 0.0% mom, 3.2% yoy in Feb, below expectations
US PPI for final demand as unchanged in February, coming in below expectations of 0.3% mom rise. The 0.3% mom increase in goods prices was offset by -0.2% mom decline in services.
On an annual basis, PPI slowed to 3.2% yoy, down from January’s 3.7% yoy and missing the expected 3.3% yoy reading.
PPI excluding food, energy, and trade services, rose 0.2% mom. Over the past 12 months, this measure advanced 3.3% yoy, maintaining a relatively steady pace.
US intial jobless claims tick down to 220k, vs exp 224k
US initial jobless claims fell -2k to 220k in the week ending March 8, slightly below expectation of 224k. Four-week moving average of initial claims rose 1.5k to 226k.
Continuing claims fell -27k to 1870k in the week ending March 1. Four-week moving average of continuing claims rose 6k to 1872k.
ECB’s Nagel: Tariffs could push Germany into recession again, but Fiscal shift provides stability
German ECB Governing Council member Joachim Nagel warned that Germany could face a third consecutive year of economic contraction if US tariffs take full effect. Speaking to BBC, Nagel noted that without the tariffs, Germany’s economy was already expected to stagnate with minimal growth of around 0.2%. With escalating trade tensions, the risk of another recession looms large.
Nagel sharply criticized US President Donald Trump’s tariff policies, calling them “economics from the past” and “definitely not a good idea.” He defended the EU’s decision to impose retaliatory tariffs, adding that such a response was a “necessity” rather than a choice.
Addressing Germany’s recent shift in fiscal policy, Nagel described the decision to increase borrowing for defense and infrastructure spending as an “extraordinary measure for an extraordinary time.”
He pointed out that the global economy is undergoing “tectonic changes,” which justify a more flexible approach to fiscal management. While Germany has traditionally maintained strict budget discipline, this shift would provide “some financial breathing room” to support recovery in the coming years, and send a “stability signal” to markets.
Eurozone industrial production rises 0.8% mom, led by intermediate and capital goods
Eurozone industrial production posted a solid 0.8% mom increase in January, aligning with market expectations. The gains were driven primarily by a 1.6% rise in intermediate goods output and a 0.5% increase in capital goods production. However, declines were seen in other categories, with energy production falling by -1.2%, durable consumer goods slipping -0.2%, and non-durable consumer goods dropping -3.1%.
Across the broader European Union, industrial production rose by a more modest 0.3% mom. Among individual member states, Lithuania (+4.6%), Portugal (+3.7%), and Austria (+3.3%) recorded the strongest gains, while Malta (-12.9%), Denmark (-10.6%), and Slovakia (-7.3%) saw the sharpest declines.
BoJ’s Ueda expects real wages to rise, boosting consumption
BoJ Governor Kazuo Ueda signaled optimism about Japan’s economic outlook, telling the parliament today that “import-cost-driven inflation” is expected to moderate while wages continue to “rise steadily.” This shift could lead to an improvement in real wages and consumption, a critical factor for sustaining domestic demand.
Ueda’s comments align with recent developments in Japan’s annual “shunto” wage negotiations, which have resulted in record pay hikes across major companies.
Hitachi announced a record 6.2% rise in monthly wages, fully meeting union demands. Toyota’s key auto parts supplier, Denso, also committed to historic pay hikes, while Toyota itself stated that the overall wage increase for its manufacturing staff would match last year’s levels—the highest seen since 1999.
Further clarity on the scale of wage hikes will come on March 14, when Rengo, Japan’s largest labor union federation representing 7 million workers, releases its preliminary report. Rengo had been seeking an average wage increase of 6.09%, up from last year’s 5.85%.
EUR/USD Mid-Day Outlook
Daily Pivots: (S1) 1.0867; (P) 1.0897; (R1) 1.0919; More…
Intraday bias in EUR/USD stays neutral first. Deeper retreat might be seen towards 55 4H EMA (now at 1.0762). But strong support should be seen from 38.2% retracement of 1.0358 to 1.0946 at 1.0721 to contain downside. On the upside, break of 1.0946 will resume the rally from 1.0176 to retest 1.1274 key resistance next.
In the bigger picture, the strong break of 55 W EMA (now at 1.0675) suggests that fall from 1.1274 (2024 high) has completed as a three wave correction to 1.0176. Rise from 0.9534 is still intact, and might be ready to resume. Decisive break of 1.1274 will target 100% projection of 0.9534 to 1.1274 from 1.0176 at 1.1916. Also, that will send EUR/USD through a multi-decade channel resistance will carries larger bullish implication. This will now be the favored case as long as 1.0531 resistance turned support holds.
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USDCAD retests 100/200 hour MAs at day highs, but stalls.
USDCAD technicals
USDCAD has experienced choppy price action today, with support holding above the 50% retracement level of thethe move up from the February 2025 low at 1.4345.
On the upside, resistance remains firm between the 100-hour and 200-hour moving averages (1.4387–1.4403). A breakout above these MAs would shift the bias higher, while staying below keeps sellers in control with the 50% at 1.4345 the downside target.
US Commerce Sec. Lutnick said in a Fox News area today that Mexico and UK have been pragmatic and thoughtful about tariffs. The EU and Canada have not.
For what it is worth, Trump on Truth Social quoting Grant Cardone from Cardone Capital :
That may be true, but steel and aluminum, and lumber is nice.
I do think that Lutnick does meet with Canada officials today.
BTW
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What Is the Arms Index (TRIN)? Calculating and Using This Forex Indicator
The Arms Index (TRIN) is a tool that analyzes the market by looking at the number of advancing and declining stocks, and their trading volume. Based on this analysis, you can build an efficient short-term trading strategy for stock indices.
Since this tool is an oscillator, it helps traders spot short-term imbalances in the market. It finds moments when the market is overbought or oversold, signaling an opportunity to open trades within a few-day time frame. In this article, we’ll explain the formula to calculate TRIN, provide examples of signals, and describe how to use it in real markets.
The article covers the following subjects:
Major Takeaways
- The Arms Index (TRIN) is a technical indicator created in the 1960s. It’s an oscillator that shows when the market is overbought or oversold on certain days.
- It looks at price movements within one day, so it’s a tool for making short-term predictions.
- It compares the ratio of advancing to declining stocks with the ratio of their advancing volume to declining volume.
- Values above 1 suggest bullish sentiment (investors are buying stocks). Values below 1 indicate bearish sentiment. If they rise above 1.3, it signals overbought conditions. If they drop below 0.7, it signals oversold conditions.
- Extreme values depend on the market period, and traders must figure these out independently.
- The tool gives fairly accurate signals, but it can make mistakes. To avoid errors, you need to understand the indicator’s formula and use other instruments to filter signals.
- It works well for short-term trading of stock indices. Most professional trading platforms support this indicator, but you can calculate it yourself.
What Is the Arms Index (TRIN)?
The Arms Index, also called the Short-Term Trading Index (TRIN), is a technical indicator that belongs to the oscillator category. Its main job is to measure the number of shares going up or down and their trading volume using free, publicly available market data. It helps estimate overall market sentiment.
Richard W. Arms Jr. invented TRIN in 1967. His idea was to check how many shares in a stock index rose and how many fell in one day, and how much volume was behind those moves. This idea of Richard Arms was simple, and it’s surprising no one thought of it earlier.
This short-term trading index is important in finance. It’s displayed on the main wall of the New York Stock Exchange during trading hours. Many traders use it as a filter for their decisions, and it’s particularly instrumental in short-term trading.
Here’s an example of the NYSE stock index:
How to Calculate the Arms Index (TRIN)
The Arms Index is available in many professional charting apps. However, instead of relying on automated tools, you can compute these ratios manually to understand the process.
Follow these steps:
- Find the Advance/Decline Ratio (AD Ratio): Divide the number of stocks that went up by the number of stocks that went down in one day.
- Calculate the Advance/Decline Volume (AD Volume): Divide the total trading volume of rising stocks by the total volume of falling stocks.
- Combine the AD Ratio with the Advancing and Declining Volume Ratio to find the value of the indicator, also known as TRIN.
Here’s the formula:
Where:
- Advancing Stocks: Number of stocks that rose during the day.
- Declining Stocks: Number of stocks that fell.
- Advancing Volume: Total volume of all rising stocks.
- Declining Volume: Total volume of all falling stocks.
With these calculations, you can predict price movements for the next few days. After that, a new signal might appear.
These predictions rely on overbought and oversold levels. They indicate when the stock index (and most shares included in it) might change direction. We’ll explain how to use and understand the indicator in more detail next.
One thing to note: If you calculate TRIN daily, the chart will look jagged and hard to read. To make it smoother, many traders add a moving average to the calculations.
Compare:
And here’s another chart for the same period with a MA applied:
Interpreting the TRIN Values
The Arms Index gives a detailed, active look at price fluctuations in the total value of stock exchanges like the NYSE or NASDAQ. It measures their strength and size across the entire market, especially during periods of high volatility.
Based on the formula, the TRIN index can have three types of values:
- Value = 1: The AD Ratio equals the AD Volume Ratio. The market is balanced between buyers and sellers. Rising volume is spread evenly across rising stocks, and falling volume is spread evenly across falling stocks.
- Value < 1: This means rising stocks have more volume than falling stocks on average. Some analysts noticed that TRIN is often below 1, showing a general bullish bias in stock markets.
- Value > 1: This is seen as a bearish signal because the average volume of falling stocks is higher than that of rising stocks.
Still, you need to set upper and lower limits for the indicator to identify key overbought or oversold zones. Tests have shown that the farther the value moves from 1.0, the bigger the imbalance between buyers and sellers.
For example, the market is oversold if the signal line reaches 3. Bearish sentiment is too strong, so it might be a good time to buy. If the signal line drops below 0.5, the market might be overbought, so it could be a good time to sell.
Using the TRIN in Trading
Most of the time, TRIN values stay in a normal range, which isn’t helpful for traders because it shows a balanced market where buyers and sellers are equal, and prices follow the main trend. One issue with this stability is that it makes it harder to forecast sharp price fluctuations, though customer reviews of trading platforms often highlight how TRIN helps spot these shifts when paired with other tools.
The key is to spot drastic price changes compared to the past few days. If the value hits an obvious extreme, it’s time to act. Each market period has its own extreme values. For example:
For the NYSE Composite from May to October 2024, extreme values were above 1.5 and below 0.5. There were seven signals: Signals 1, 3, 4, and 6 were great chances to buy the financial instrument with small stop-losses. Signal 2 caused a loss almost right away. After Signal 5 was produced, the price corrected back materially before moving in the right direction. Signal 7 gave one very effective chance to sell.
Now, we’ll look at a different period and identify its extreme values:
The example above illustrates the period from March to October 2022 for the NYSE Composite.
Always check the main trend’s direction. If the trend is up, looking for short positions is not wise. Most of them will likely produce losses under your trading strategy.
Limits and Important Points
The Arms Index is a helpful tool for stock market traders but has flaws. Part of its challenge lies in its relative sensitivity to daily volume shifts, which can skew results.
Here are some tricky cases to watch out for:
- Imagine a bullish market where rising shares outnumber falling shares 2 to 1, and rising volume is also twice the falling volume. On a chart, you will see a perfect wide-ranging white candle indicating a clear bullish sentiment, but the indicator will provide a neutral reading: (2/1) / (2/1) = 1.0. This suggests balance, which isn’t right.
- Now, picture another bullish scenario: Rising stocks outnumber falling stocks 3 to 1, and rising volume is twice the falling volume. In this case, TRIN would give a bearish value: (3/1) / (2/1) = 1.5. That’s misleading when the market’s clearly favoring the bulls.
So, like any technical indicator, TRIN can give false signals. To lower risks, check the overall market trend and only trade signals that align with it.
This method isn’t good for long-term trading. Since it examines stocks and volume over a 24-hour period, predictions work for up to a week at most.
Conclusion
TRIN is a simple but useful way to see how buyers and sellers balance out in a liquid stock index over one trading day. Its calculations use trading volume and the number of advancing and declining stocks.
If the market rises amid strong volume, TRIN is below 1, showing bullish sentiment. If it’s above 1, it points to a falling market that might continue.
Traders look for extreme values to spot entry points. If the signal line moves too far from its average range, it’s a buy or sell signal, depending on the direction. These signals highlight a natural supply-demand imbalance in the market that you can exploit.
Common Questions About the Arms Index TRIN
The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteFinance broker. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2014/65/EU.
According to copyright law, this article is considered intellectual property, which includes a prohibition on copying and distributing it without consent. -
Canadian dollar rises as BoC trims rates
The Canadian dollar is steady on Thursday. In the European session, USD/CAD is trading at 1.4379, up 0.06% on the day.
Bank of Canada lowers rates to 2.75%
There was no surprise from the Bank of Canada, which lowered rates by a quarter-point, bringing the cash rate to 2.75% and giving a boost to the Canadian dollar. The BoC has lowered rates at seven consecutive meetings and has chopped 225 basis points since last June.
Behind the modest quarter-point cut, there is growing alarm at the Bank of Canada over the trade dispute with the US. The rate statement noted the “pervasive uncertainty created by the continuously changing US tariffs threats” was weighing on plans of consumers and business plans to spend. The statement also warned that “monetary policy cannot offset the impacts of a trade war”. Governor Macklem echoed these concerns at the follow-up press conference, calling the trade conflict a “new crisis” and warning that the economic impact on Canada could be “severe”.
US inflation drops more than expected
US inflation surprised on the upside in February. Headline inflation eased to 0.2% m/m from 0.5% and below the market estimate of 0.3%. Annually, headline inflation dropped to 2.8% from 3% and below the market estimate of 2.9%.
It was a similar story for core CPI, which fell to 0.2% from 0.4%, below the market estimate of 0.3%. Annually, the core rate dropped to 3.1% from 3.3%, shy of the market estimate of 3.2%. This marked the lowest level since April 2021 and the decline is significant as core inflation has been persistent and well above the Federal Reserve’s target of 2%.
The Federal Reserve remains in a wait-and-see mode with regard US trade policy. The Fed is virtually certain to stay on the sidelines at next week’s meeting. The probability of a rate cut in May has fallen to 30%, down from 46% before the inflation report.
USD/CAD Technical
- USD/CAD tested resistance at 1.4404 earlier. Above, there is resistance at 1.4454
- 1.4322 and 1.4272 are the next support levels
Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.
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Does FX Spot+ add up for traders?
New CME venue aims to provide easier access to FX futures liquidity, but some worry about its stability in choppy markets
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Will cut interest rates and RRR at a proper time
The People’s Bank of China (PBOC) said on Thursday that they “will cut interest rates and Reserve Requirement Ratio (RRR) at a proper time.”
Additional takeaways
Will keep liquidity ample.
Will guide social financing cost to lower.
Will strenghthen expectation guidance, maintain yuan exchange rate basically stable at a reasonable and balanced level.
Market reaction
At the time of writing, AUD/USD is down 0.55% on the day, trading at 0.6285.
PBOC FAQs
The primary monetary policy objectives of the People’s Bank of China (PBoC) are to safeguard price stability, including exchange rate stability, and promote economic growth. China’s central bank also aims to implement financial reforms, such as opening and developing the financial market.
The PBoC is owned by the state of the People’s Republic of China (PRC), so it is not considered an autonomous institution. The Chinese Communist Party (CCP) Committee Secretary, nominated by the Chairman of the State Council, has a key influence on the PBoC’s management and direction, not the governor. However, Mr. Pan Gongsheng currently holds both of these posts.
Unlike the Western economies, the PBoC uses a broader set of monetary policy instruments to achieve its objectives. The primary tools include a seven-day Reverse Repo Rate (RRR), Medium-term Lending Facility (MLF), foreign exchange interventions and Reserve Requirement Ratio (RRR). However, The Loan Prime Rate (LPR) is China’s benchmark interest rate. Changes to the LPR directly influence the rates that need to be paid in the market for loans and mortgages and the interest paid on savings. By changing the LPR, China’s central bank can also influence the exchange rates of the Chinese Renminbi.
Yes, China has 19 private banks – a small fraction of the financial system. The largest private banks are digital lenders WeBank and MYbank, which are backed by tech giants Tencent and Ant Group, per The Straits Times. In 2014, China allowed domestic lenders fully capitalized by private funds to operate in the state-dominated financial sector.
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US CPI softens, Oil prices rise, BoC lowers rates
Join OANDA Market Analyst Kenny Fisher & podcast guest Nick Syiek (TraderNick) as they review the latest market news and moves. MarketPulse provides up-to-the-minute analysis on forex, commodities and indices from around the world.
Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.
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USD/CAD Forecast: Dollar Eases on Soft US Inflation Figures
- The USD/CAD forecast shows a weaker dollar.
- Data in the previous session revealed softer-than-expected US consumer inflation.
- The Bank of Canada cut interest rates by 25-bps on Wednesday, as expected.
The USD/CAD forecast shows increased bearish momentum after downbeat US inflation data. At the same time, the Canadian dollar strengthened after a cautious tone during the BoC policy meeting. Moreover, support came from reports of Canada’s counter-tariffs on Trump’s steel and aluminum duties.
Data in the previous session revealed softer-than-expected consumer inflation in the US in February. The CPI increased by 0.2%, a significant drop from the previous reading of 0.5%. Moreover, it was smaller than the forecast of 0.3%. Meanwhile, the annual figure increased by 2.8%, missing estimates of 2.9%.
The downbeat numbers increase pressure on the Fed to lower borrowing costs. A slowdown in the economy plus softer inflation is enough motivation for policymakers to cut interest rates. As a result, rate cut expectations rose, hurting the dollar.
Meanwhile, the Bank of Canada cut interest rates by 25-bps on Wednesday, as expected. However, the governor said the central bank would proceed with caution due to the uncertainty regarding Trump’s tariffs. Consequently, the loonie gained.
Elsewhere, Trump’s tariff on steel and aluminum imports ignited a trade war with Canada and Europe. Canada is a major exporter of steel and aluminum to the US.
USD/CAD key events today
- US core PPI m/m
- US PPI m/m
- US unemployment claims
USD/CAD technical forecast: Oscillating in the 1.4301-1.4501 range
USD/CAD 4-hour chart On the technical side, the USD/CAD price is oscillating between the 1.4301 support and the 1.4501 resistance levels. Bears and bulls are battling for control, with each showing strength in this range area.
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Currently, the price trades in the middle of the range. It has broken below the SMA and the RSI has dropped below 50. This is a sign that bears are trying to retest the range support. However, bulls are threatening to push the price back above the SMA.
If bears maintain control, the price will soon reach the 1.4301 support level. A break below this level will indicate a bearish win, starting a downtrend. On the other hand, if the price goes back above the SMA, it will revisit the 1.4501 resistance. A break above this level will signal the start of a bullish trend.
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Forex Steadies Despite Fresh Tariff Escalations, Euro Starting to Retreat
Forex markets are holding steady in Asian session today, with major currency pairs and crosses all confined within yesterday’s ranges. This lack of movement comes despite a significant escalation in the US-led trade war, as newly effective 25% tariffs on all imported steel and aluminum products have prompted swift retaliation from key trading partners.
In swift response, European Commission President Ursula von der Leyen announced that the EU would implement retaliatory tariffs of equal value, totaling USD 28B, on a range of U.S. goods beyond just metals. These measures, set to take effect on April 1, will target products including textiles, home appliances, and agricultural goods. Meanwhile, Canada—the largest supplier of steel and aluminum to the U.S.—is hitting back with USD 20.7B in countermeasures, including a 25% tariff on steel products and increased taxes on US imports ranging from computers and servers to sports equipment and cast-iron products.
The UK has so far taken a more measured stance, with Prime Minister Keir Starmer stating that his government is adopting a “pragmatic approach” while keeping “all options on the table.” Australia, on the other hand, has opted against imposing retaliatory tariffs for now. Instead, Prime Minister Anthony Albanese has urged Australians to support local industries in response to Trump’s refusal to grant an exemption for Australian steel and aluminum.
On the currency front, Swiss Franc is so far the weakest performer this week, followed by Loonie and then Dollar. Euro remains the strongest but has begun to pull back in some crosses, with Sterling and Kiwi following. Yen and Aussie are positioned in the middle.
Technically, EUR/CAD could have formed a short term top at 1.5856, ahead of 200% projection of 1.4483 to 1.5058 from 1.4740 at 1.5890. Some consolidations would be seen with risk of deeper retreat to 55 4H EMA (now at 1.5470). But downside should be contained by 1.5401 support to bring rebound, and up trend resumption later.
In Asia, at the time of writing, Nikkei is up 0.09%. Hong Kong HSI is down -1.44%. China Shanghai SSE is down -0.73%. Singapore Strait Times is down -0.03%. Japan 10-year JGB yield is up 0.017 at 1.541. Overnight, DOW fell -0.20%. S&P 500 rose 0.49%. NASDAQ rose 1.22%. 10-year yield rose 0.030 to 4.318.
BoJ’s Ueda expects real wages to rise, boosting consumption
BoJ Governor Kazuo Ueda signaled optimism about Japan’s economic outlook, telling the parliament today that “import-cost-driven inflation” is expected to moderate while wages continue to “rise steadily.” This shift could lead to an improvement in real wages and consumption, a critical factor for sustaining domestic demand.
Ueda’s comments align with recent developments in Japan’s annual “shunto” wage negotiations, which have resulted in record pay hikes across major companies.
Hitachi announced a record 6.2% rise in monthly wages, fully meeting union demands. Toyota’s key auto parts supplier, Denso, also committed to historic pay hikes, while Toyota itself stated that the overall wage increase for its manufacturing staff would match last year’s levels—the highest seen since 1999.
Further clarity on the scale of wage hikes will come on March 14, when Rengo, Japan’s largest labor union federation representing 7 million workers, releases its preliminary report. Rengo had been seeking an average wage increase of 6.09%, up from last year’s 5.85%.
US stocks find temporary support, but downside risks persist
Risk sentiment showed signs of stabilization in the US overnight, with S&P 500 and NASDAQ posting gains. However, stocks are merely digesting recent steep losses rather than having a decisive turnaround.
The reaction to lower-than-expected US consumer inflation data was relatively muted. The market’s cautious interpretation of the data is justified, as the latest CPI figures do not yet capture the full effects of tariff-related price pressures. There is still a lack clarity on how inflation will evolve under the new tariff regime, particularly when reciprocal tariffs come into play on April 2. Nevertheless, for the moment at least, disinflationary momentum is leaning in the Fed’s favor.
Interestingly, market pricing has shifted the expected timing of Fed’s next rate cut back from May to June. Futures now show just 31% probability of a 25bps cut in May, while the odds for a June cut have climbed to 78%.
Traders appear to believe Fed will need additional time to assess the economic impact of tariffs before making a policy move. From a timing perspective, June would align better with Fed’s next round of economic projections, allowing policymakers to incorporate more data into their decision-making.
As for NASDAQ, oversold condition as seen in D RSI could start to slow downside momentum, and some near term consolidations cannot be ruled out. But risk will stay on the downside as long as 18604.46 resistance holds. Fall from 20204.58 is seen as a correction to the whole up trend from 10088.82 (2022 low) at least. It should extend to 38.2% retracement of 10088.82 to 20204.58 at 16340.36 before bottoming.
Gold gains as markets await Russia’s response to ceasefire proposal
Gold picked up momentum as investors closely monitor Kremlin’s response to the proposed ceasefire deal in Ukraine, as US officials head to Russia for negotiations.
Russia has yet to publicly endorse an immediate ceasefire, but has indicated that it is reviewing the plan, and a phone call between US President Donald Trump and Russian President Vladimir Putin is on the table.
However, Trump remains skeptical, stating that while he has received “positive messages” about the ceasefire, such reassurances “mean nothing” without concrete action from Putin.
Trump also warned that if Putin refuses to sign the deal, the US could take “financially very bad” actions against Russia, likely hinting at severe sanctions.
Ukrainian President Volodymyr Zelenskyy said earlier in the week that stronger Western financial and military support would follow should the ceasefire negotiations fail.
Technically, Gold’s near term rebound from 2832.41 extended higher today and focus is now on 2956.09 resistance. Decisive break there will resume the larger up trend to 3000 psychological, and possibly further to 61.8% projection of 2584.24 to 2956.09 from 2832.41 at 3062.21.
However, break of 2905.80 support should extend the corrective pattern from 2956.09 with another falling leg back to 2832.41 and possibly below.
USD/JPY Daily Outlook
Daily Pivots: (S1) 147.51; (P) 148.35; (R1) 149.10; More…
Intraday bias in USD/JPY remains neutral for the moment, and more consolidations could be seen above 146.52. Upside of recovery should be limited by 150.92 support turned resistance. On the downside, sustained trading below 61.8% retracement of 139.57 to 158.86 at 146.32 will pave the way to 139.57 support.
In the bigger picture, price actions from 161.94 are seen as a corrective pattern to rise from 102.58 (2021 low), with fall from 158.86 as the third leg. Strong support should be seen from 38.2% retracement of 102.58 to 161.94 at 139.26 to bring rebound. However, sustained break of 139.26 would open up deeper medium term decline to 61.8% retracement at 125.25.
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Risk sentiment on the rocks ahead of European trading
In Asia, Japan’s benchmark Nikkei index was up around 1.4% at the highs earlier today but have now pared gains to be up by just 0.2%. This comes as US futures are also slumping with tech shares on the backfoot after having led the bounce yesterday. S&P 500 futures are down 0.4% with Nasdaq futures down 0.6%.
S&P 500 index weekly chart
The overall chart still shows that this has been a rough week for US stocks in general. The S&P 500 is still down roughly 3% this week despite yesterday’s bounce with the Nasdaq also in a similar spot.
The break of the key trendline support in both indices remain the standout development since last week. And that continues to pile further downside pressure amid concerns over Trump’s tariffs and a softening US economy.
In FX, USD/JPY is back down slightly from 148.00 earlier to 147.85 currently. The dollar is steadier elsewhere but remains mixed overall on the week. EUR/USD is keeping closer to 1.0900 still while GBP/USD continues to nudge higher towards 1.3000.
Meanwhile, commodity currencies are holding little changed overall this week against the greenback. AUD/USD is pretty much flat at 0.6310 while USD/CAD is just marginally higher on the week after yesterday’s fall, trading at 1.4385 at the moment.
All in all, the bounce in risk yesterday is not really hinting at a turnaround in sentiment just yet. The market mood remains very fragile and the charts are also suggesting that there is scope for more downside pressure in the short-term.
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NZD/USD extends its upside to near 0.5750, eyes on US PPI release
- NZD/USD gains traction to around 0.5740 in Thursday’s early Asian session.
- Trump’s unpredictable announcements on tariffs undermine the US Dollar.
- China’s deflationary pressures might cap the upside for China-proxy Kiwi.
The NZD/USD pair extends its upside to around 0.5740 during the early Asian session on Thursday, bolstered by the weaker US Dollar (USD). The US Producer Price Index (PPI) will be the highlight later on Thursday, followed by the weekly Initial Jobless Claims.
Worries over US President Donald Trump’s unpredictable trade policies have spread uncertainty among investors, weighing on the Greenback. Investors are worried about US weaker economic data as well as big cuts to the government workforce and government spending. Goldman Sachs analysts last week raised its recession chance from 15% to 20%, citing it saw policy changes as the key risk to the economy.
On the other hand, concerns over persistent deflationary pressures in China, New Zealand’s biggest export market, undermine the Kiwi. China’s Consumer Price Index (CPI) in February missed expectations and fell at the sharpest pace in 13 months, while producer price deflation persisted.
“China’s economy still faces deflationary pressure. While sentiment was improved by the developments in the technology space, domestic demand remains weak,” said Zhiwei Zhang, president and chief economist at Pinpoint Asset Management.
New Zealand Dollar FAQs
The New Zealand Dollar (NZD), also known as the Kiwi, is a well-known traded currency among investors. Its value is broadly determined by the health of the New Zealand economy and the country’s central bank policy. Still, there are some unique particularities that also can make NZD move. The performance of the Chinese economy tends to move the Kiwi because China is New Zealand’s biggest trading partner. Bad news for the Chinese economy likely means less New Zealand exports to the country, hitting the economy and thus its currency. Another factor moving NZD is dairy prices as the dairy industry is New Zealand’s main export. High dairy prices boost export income, contributing positively to the economy and thus to the NZD.
The Reserve Bank of New Zealand (RBNZ) aims to achieve and maintain an inflation rate between 1% and 3% over the medium term, with a focus to keep it near the 2% mid-point. To this end, the bank sets an appropriate level of interest rates. When inflation is too high, the RBNZ will increase interest rates to cool the economy, but the move will also make bond yields higher, increasing investors’ appeal to invest in the country and thus boosting NZD. On the contrary, lower interest rates tend to weaken NZD. The so-called rate differential, or how rates in New Zealand are or are expected to be compared to the ones set by the US Federal Reserve, can also play a key role in moving the NZD/USD pair.
Macroeconomic data releases in New Zealand are key to assess the state of the economy and can impact the New Zealand Dollar’s (NZD) valuation. A strong economy, based on high economic growth, low unemployment and high confidence is good for NZD. High economic growth attracts foreign investment and may encourage the Reserve Bank of New Zealand to increase interest rates, if this economic strength comes together with elevated inflation. Conversely, if economic data is weak, NZD is likely to depreciate.
The New Zealand Dollar (NZD) tends to strengthen during risk-on periods, or when investors perceive that broader market risks are low and are optimistic about growth. This tends to lead to a more favorable outlook for commodities and so-called ‘commodity currencies’ such as the Kiwi. Conversely, NZD tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.
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"Bank of Japan officials see several reasons against intervening in the bond market"
Bank of Japan Governor Ueda was on the wires yesterday re rising JGB yields
- Bank of Japan Governor Ueda says higher long term rates reflecting market views on economy
- BOJ governor Ueda: Underlying inflation still remains below 2%
Bloomberg had a piece up subsequently saying
- Bank of Japan officials see several reasons against intervening in the bond market even after benchmark yields hit the highest level since 2008
Bloomberg is gated, in brief:
- Officials are determined not to step into the market unless extreme moves take place, for fear of creating thresholds for traders that would impact market functioning
- investors need to get used to a world without the central bank’s yield curve control after the program ended last year
Bloomberg citing ‘people familiar’.
I think the views expressed by these unnamed officials are in line with what we’ve been thinking in response to Ueda’s comments. The BoJ will be there if needed, but conditions would have to have deteriorated markedly for them to step in.
This article was written by Eamonn Sheridan at www.forexlive.com.
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Brent Crude Update – Oil Prices Rally as EIA Reduces Oil Surplus Estimates
- Brent crude prices are rising due to lower-than-expected U.S. oil and fuel supplies and revised EIA forecasts for smaller oil surpluses in 2025 and 2026.
- Libya has restarted oil production at the Mabruk field, aiming to increase output significantly, while Kuwait also plans to boost its production.
- OPEC expects strong global oil demand growth in 2025, despite potential trade policy impacts.
Most Read: Dow Jones (DJIA), S&P 500 Under Pressure as Record Cash Levels Suggest More Downside Ahead
Brent crude prices are up around 1.55% at the time of writing as the commodity attempts a sustained recovery.
U.S. government data revealed that oil and fuel supplies are lower than expected. U.S. government data on Wednesday showed crude oil stockpiles increased by 1.4 million barrels last week, which was smaller than the 2-million barrel increase that experts had predicted.
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The U.S. Energy Information Administration (EIA) has updated its forecast for oil surpluses in 2025 and 2026, lowering the expected surplus due to sanctions. The EIA now predicts a surplus of 100,000 barrels per day in 2025, down from the earlier estimate of 500,000 barrels per day. For 2026, the surplus outlook was reduced from 1 million barrels per day to 500,000 barrels per day. These updates, especially the 2025 updates could be a contributing factor to Oils recovery over the last two days.
This news comes after the American Petroleum Institute (API) said on Tuesday that U.S. crude Oil stockpiles grew by 4.247 million barrels, even as there were strong reductions in product supplies. Brent oil prices rose by 1.32%, reaching $70.48 at 10:20 a.m. ET, which is $1 higher than last week. Meanwhile, WTI prices increased by 1.55% to $67.28, just under $1 more compared to last week.
However, investors are still worried about a possible U.S. economic slowdown and how tariffs could hurt global economic growth.
Libya’s Mabruk Field Restarts Production After a Decade – Supply Concern?
Libya has started producing oil again at the Mabruk oilfield after being shut down for ten years, the Government of National Unity announced on Wednesday. Production began on Sunday at 5,000 barrels per day and is expected to grow to 25,000 barrels per day by July.
The Chairman of Libya’s National Oil Corporation, Masoud Sulaiman, said the country aims to boost its oil production from the current 1.4 million barrels per day to 2 million barrels per day by 2028. To reach 1.6 million barrels per day as a short-term goal, Libya will need $3 to $4 billion. A new bidding round for oil licenses is planned, with cabinet approval expected before the end of January. Oil is crucial to Libya’s economy, making up more than 95% of its income.
Kuwait is also planning to increase its oil production. The CEO of Kuwait Petroleum Corp., Sheikh Nawaf al-Sabah, said at last year’s CERAWeek conference that the country wants to almost double its output. Kuwait aims to raise production from about 2.4 million barrels per day now to over 4 million barrels per day by 2035, working with international oil companies to achieve this goal.
The question is whether this will have any impact on the OPEC+ output increases scheduled to start in April. A lot of that appears to have been priced into Oil prices with the recent fall we saw, thus when the output increases begin the impact might be limited.
OPEC announced earlier today that it expects strong global oil demand growth in 2025, driven by air and road travel. The group noted that trade policies could cause ups and downs in the market, but they believe the global economy will adapt to these changes.
Week Ahead and Final Thoughts
Market sentiment is in a constant state of flux at the moment with new tariff announcements and proposals coming out daily. If this continues it would be wise to keep an eye on any comments which may have a negative impact on global growth forecasts. This in turn will weigh on Oil prices as demand concerns will increase.
Another area to keep an eye is the proposed deal with Russia and Ukraine with markets waiting to hear whether the rRussians will be willing to accept a ceasefire deal proposed by the US and Ukraine after their meeting in Saudi Arabia. A deal could alleviate sanctions on Russian crude and thus see an excess of supply enter the marker.
Technical Analysis – Brent Crude
This is a follow-up analysis of my prior report “Brent Oil Price Analysis: Six-Month Lows Amid OPEC Output, Tariffs & Russia-Ukraine Negotiations” published on 25 February 2025.
From a technical analysis standpoint, Brent has now achieved a change in structure at a key psychological level around the 69.00-70.00 mark.
Today’s daily candle close above the swing high at 70.83 puts bulls in charge for now, but there are a host of hurdles to navigate if Oil prices are to stage a sustained recovery.
The 14-period RSI has also moved away from oversold territory and approaching the neutral level at 50. If the RSI breaks above 50, this could embolden bulls even further as it could be seen as another sign that momentum may be shifting once more.
Immediate resistance rests at 72.38 and 74.68 before the psychological 75.00 handle comes into focus.
If the bullish momentum fades, immediate support rests at 70.00 and 69.52 before the 69.00 handle becomes an area to keep an eye on.
Brent Crude Oil Daily Chart, March 12, 2025
Source: TradingView (click to enlarge)
Support
- 70.00 (psychological level)
- 69.52
- 69.00
Resistance
- 72.38
- 74.68 (100-day MA)
- 75.00 (psychological level)
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