Tag: AUD

  • Commodities Lift AUD and CAD as Tariff Speculation Builds

    Commodities Lift AUD and CAD as Tariff Speculation Builds


    Commodity currencies are finding a bid in Asian session today, though still largely range-bound against Dollar. A sharp rally in Copper prices, driven by US tariff fears, is likely giving Aussie a tailwind, countering lingering drag from today’s slightly weaker-than-expected inflation data. Meanwhile, Loonie is benefitting from speculation that Canada may be assigned lower tariffs under US President Donald Trump’s upcoming global trade measures.

    According to a Toronto Star report, the Trump administration is preparing a tiered structure for its reciprocal tariffs, grouping trading partners into low, medium, and high tariff categories. Though details remain vague, sources suggest that Canada could be in the “low” tier—but with a twist: tariffs may be cumulative across sectors. The lack of clarity on what qualifies as “high” is keeping markets on edge too, with figures ranging from 25% to triple digits being floated.

    Despite the moves in FX, the broader market isn’t displaying strong risk-on conviction. Yen and Swiss Franc are both under pressure—typically a signal of risk appetite—but equities have yet to respond in kind. Yen, in particular, is back as the day’s worst performer, following a recovery yesterday. The lack of follow-through in stocks suggests traders remain hesitant ahead of next week’s highly anticipated “Liberation Day” tariffs announcement on April 2.

    In Europe, UK CPI data will be the key focus today. Barring any dramatic surprises, the figures should support BoE’s current stance of slow, measured easing, with rate cuts expected once per quarter. That likely caps any Sterling upside for now, even as traders shift focus toward Euro and GBP cross flows for near-term positioning.

    Technically, EUR/GBP’s break of 55 D EMA now argues that rebound from 0.8239 has completed at 0.8448 already, as a leg inside the sideway pattern from 0.8221. Deeper fall would be mildly in favor back to 0.8239 support next.

    In Asia, at the time of writing, Nikkei is up 1.02%. Hong Kong HSI is up 0.25%. China Shanghai SSE is up 0.02%. Singapore Strait Times is up 0.36%. Japan 10-year JGB yield is up 0.014 at 1.587. Overnight, DOW rose 0.01%. S&P 500 rose 0.16%. NASDAQ rose 0.46%. 10-year yield fell -0.024 to 4.307.

    Fed’s Goolsbee sees surging inflation expectations as a red flag

    Chicago Fed President Austan Goolsbee warned that a shift in market-based long-run inflation expectations toward the elevated levels seen in consumer surveys, such as the University of Michigan’s, would be a “major red flag” demanding immediate Fed attention.

    He emphasized that if investor sentiment converges with households’ expectations, now at the highest since 1993, Fed would have little choice but to respond.

    Goolsbee noted that Fed has moved into “a different chapter” marked by heightened uncertainty, contrasting with the “golden path” of 2023 and 2024, when inflation eased without damaging growth or jobs.

    While he still sees interest rates being “a fair bit lower” in the next 12–18 months, he acknowledged that economic unpredictability, particularly surrounding trade policy, may delay Fed’s next move. His stance: “wait and see is the correct approach,” though not without costs.

    In conversations with business leaders, Goolsbee said April 2—the date of expected US tariff announcements—has become a key flashpoint of anxiety. This uncertainty, he said, is fueling a broad hesitancy in investment and hiring decisions across the Fed district.

    BoJ’s Ueda: Vigilant on upside inflation risks, signals readiness for stronger action

    BoJ Governor Kazuo Ueda emphasized today that the central bank remains “vigilant” to upside surprises in “underlying inflation.

    While recent “very high” inflation has been driven largely by temporary factors like import costs and food prices, there’s still a possibility that underlying inflation could accelerate more quickly than expected.

    Ueda warned that if such “broad-based inflation” materializes, BoJ would need to respond by raising interest rates and even take “stronger steps”.

    However, for now, he reaffirmed the view that underlying inflation remains “just a bit” short of the 2% target, though it is on track to gradually converge to that level.

    Meanwhile, data released today showed Japan’s services producer price index rose 3.0% yoy in February, a deceleration from January’s 3.2% and below expectations of 3.1%.

    Australia CPI slows to 2.4% in Feb, trimmed mean ticks down to 2.7%

    Australia’s monthly CPI eased to 2.4% yoy in February, slightly below expectations of 2.5% yoy and marking a step down from the steady 2.5% yoy pace seen over the past two months.

    Core inflation measures also softened, with the trimmed mean slipping from 2.8% yoy to 2.7% yoy. CPI excluding volatile items and holiday travel eased from 2.9% yoy to 2.7% yoy.

    The largest contributors to annual inflation were food and non-alcoholic beverages (+3.1%), alcohol and tobacco (+6.7%), and housing (+1.8%).

    Still, the overall slowdown adds to the case for RBA to remain on hold at its upcoming meeting. The central bank has made it clear that February’s rate cut does not set an automatic path for further easing. With the more comprehensive Q1 CPI data still to come, today’s numbers are unlikely to shift policy expectations in a meaningful way.

    Tariff fears drive Copper to record in classic commodity fifth-wave extension

    US Copper prices surged to fresh record highs, driven by rising expectations that President Donald Trump may soon impose tariffs on copper imports.

    Traders are responding to signals that the Commerce Department’s review—ordered by Trump in February—is advancing quickly, and that a decision, possibly imposing tariffs of up to 25%, could be announced within weeks.

    The surge reflects not only speculative buying but also a defensive scramble as traders and manufacturers brace for supply disruptions. A key driver of the move is fear, with the current rally taking the form of a classic fifth-wave extension seen in commodity markets—when panic buying exacerbates already tight conditions.

    Technically, the uptrend from January low at 3.9667 is now in its final leg of a five-wave sequence. While there may still be some upside left, strong resistance lies ahead.

    Despite the bullish momentum, Copper should soon face strong resistance soon. Two key projection levels—5.538 (161.8% of the 4.1568 to 4.8168 move from 4.4702) and 5.6298 (100% projection of 3.5021 to 5.1650 from 3.9667)—form a crucial zone that should cap the rally.

    Looking ahead

    UK CPI is the main focus in European session while Swiss will release UBS economic expectations. Later in the day, US durable goods orders will be published. BoC will release summary of deliberations.

    EUR/AUD Daily Outlook

    Daily Pivots: (S1) 1.7092; (P) 1.7143; (R1) 1.7173; More…

    EUR/AUD’s corrective fall from 1.7417 short term top is resuming and intraday bias is mildly on the downside. Still, downside of the pullback should be contained by 0.6990 support to bring rebound. On the upside, above 1.7270 will bring retest of 1.7417 first. Break there will resume rise from 1.6335 to 161.8% projection of 1.5963 to 1.6800 from 1.6355 at 1.7709 next.

    In the bigger picture, the breach of 1.7180 key resistance (2024 high) suggests that up trend from 1.4281 (2022 low) is resuming. Sustained trading above 1.7180 will confirm and target 61.8% projection of 1.4281 to 1.7062 from 1.5963 at 1.7682, which is also close to 61.8% retracement of 1.9799 (2020 high) to 1.4281 at 1.7691. For now, this will remain the favored case as long as 1.6800 resistance turned support holds, even in case of deep pullback.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    23:50 JPY Corporate Service Price Index Y/Y Feb 3.00% 3.10% 3.10% 3.20%
    00:30 AUD Monthly CPI Y/Y Feb 2.40% 2.50% 2.50%
    07:00 GBP CPI M/M Feb 0.50% -0.10%
    07:00 GBP CPI Y/Y Feb 2.90% 3%
    07:00 GBP Core CPI Y/Y Feb 3.60% 3.70%
    07:00 GBP RPI M/M Feb 0.80% -0.10%
    07:00 GBP RPI Y/Y Feb 3.60% 3.60%
    09:00 CHF UBS Economic Expectations Mar 3.4
    12:30 USD Durable Goods Orders Feb -0.70% 3.20%
    12:30 USD Durable Goods Orders ex Transportation Feb 0.40% 0%
    14:30 USD Crude Oil Inventories 1.5M 1.7M
    17:30 CAD BoC Summary of Deliberations

     



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  • Dollar Slips, Euro Bounces, Aussie Awaits CPI

    Dollar Slips, Euro Bounces, Aussie Awaits CPI


    Dollar is once again under pressure as markets head into the US session, with its recent rebound losing steam in the absence of any clear-cut catalyst. While new headlines on tariffs continue to emerge almost daily, these “leaks” could only be seen as reflective of ongoing deliberations within the White House, rather than firm policy. For now, the tariff outlook remains mired in speculation, and traders are growing weary of chasing news that is yet to be confirmed — or could just as easily be reversed.

    The latest development suggests US President Donald Trump is eyeing a two-step tariff strategy, set to commence on “Liberation Day,” April 2. The proposal may include a strengthened legal foundation for a broader “reciprocal” tariff regime, which could also serve to raise revenue for future tax cuts. Additionally, a revival of vehicle import tariffs is reportedly being considered, bringing back a national security investigation from Trump’s first term.

    In Europe, German DAX is staging a notable rebound, while Euro tries to firm up against Dollar. . German Ifo data points to improving sentiment and expectations, buoyed by optimism around fiscal expansion plans. Still, questions remain about the sustainability of recovery, especially with persistent weakness in services and complications from coalition talks.

    Overall, the mood in Europe remains cautiously optimistic but restrained. While the idea of a cyclical upswing in Germany is gaining traction, it’s offset by global uncertainty, particularly around US trade policy. The lack of clarity around tariffs is also limiting the extent of positive momentum in risk assets.

    Looking ahead, the spotlight will shift to Australia with the release of monthly CPI data during the upcoming Asian session. Expectations are for inflation to hold steady at 2.5% for February. The data isn’t expected to sway RBA’s decision to hold next week. But any downside surprise would be welcomed as a sign that recent inflation upticks since Q4 have already peaked.

    Technically, AUD/USD’s price actions from 0.6087 are still seen as a corrective pattern to the fall from 0.6941. This view will hold as long as 38.2% retracement of 0.6941 to 0.6087 at 0.6413 holds. Break of 0.6186 support will argue that the downside is ready to resume through 0.6087 low.

    In Europe, at the time of writing, FTSE is up 0.78%. DAX is up 108%. CAC is up 1.24%. UK 10-year yield is up 0.034 at 4.755. Germany 10-year yield is up 0.056 at 2.831. Earlier in Asia, Nikkei rose 0.46%. Hong Kong HSI fell -2.35%. China Shanghai SSE fell -0.00%. Singapore Strait Times rose 0.46%. Japan 10-year JGB yield rose 0.028 to 1.573.

    Fed’s Kugler: Reaccelerating goods inflation unhelpful

    Fed Governor Adriana Kugler expressed growing concern over the recent behavior of inflation. Speaking today, she highlighted that some inflation subcategories “reaccelerated in recent months.” In particular, goods inflation, which had been negative in 2024 but has recently turned positive.

    She warned that this shift is “unhelpful” as goods inflation “has often kept a lid on total inflation and also affects inflation expectations”.

    Kugler added that surveys are now pointing to rising inflation expectations among consumers too, with much of the uncertainty tied to ongoing trade policy developments.

    Despite these concerns, Kugler reaffirmed confidence in the current policy stance, describing it as restrictive while Fed is “well positioned.

    Germany’s Ifo rises to 86.7, hopes build for modest recovery

    Germany’s Ifo Business Climate index edged higher from 85.3 to 86.7 in March, While the rise was slightly below market expectations of 87.0, the improvement was broad-based across sectors. Current Assessment Index ticked up from 85.0 to 85.7, above expectations of 85.5. Expectations Index rose from 85.6 to 87.7, though still shy of the 87.9 forecast.

    Across sectors, sentiment improved uniformly. The manufacturing index rose notably from -21.9 to -16.6. Services (up from -4.3 to -1.1), trade (up from -26.3 to -23.7), and construction (up from -27.4 to -24.6) all saw smaller improvements, indicating a broad but tentative shift in mood.

    Ifo President Clemens Fuest commented that “German businesses are hoping for a recovery,” a sentiment echoed by survey head Klaus Wohlrabe, who projected 0.2% growth in GDP for Q1, after -0.2% contraction in Q4.

    BoJ minutes signal readiness to tighten further if outlook holds

    Minutes from BoJ’s January 23–24 meeting revealed a growing consensus among policymakers that further tightening would be appropriate, provided the current economic and price outlooks hold.

    While the central bank raised policy rate to 0.5%, members acknowledged that real interest rates remained “significantly negative”, ensuring “accommodative financial conditions would be maintained.”

    However, the path ahead is clouded by global uncertainty. While BoJ held rates steady at its latest meeting last week, it flagged increasing risks from escalating US tariffs.

    Nevertheless, Governor Kazuo Ueda emphasized that stronger-than-expected wage growth and persistent food price inflation could keep upward pressure on underlying prices, indicating that the case for another rate hike remains very much alive.

    EUR/USD Mid-Day Outlook

    Daily Pivots: (S1) 1.0769; (P) 1.0814; (R1) 1.0845; More…

    Intraday bias in EUR/USD is turned neutral with current recovery. Corrective pattern from 1.0953 could extend with another fall. But downside should be contained by 38.2% retracement of 1.0358 to 1.0953 at 1.0726 to bring rebound. On the upside, break of 1.0953 will resume the rally from 1.0176 towards 1.1274 key resistance.

    In the bigger picture, prior 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.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    23:50 JPY BoJ Minutes
    09:00 EUR Germany IFO Business Climate Mar 86.7 87 85.2 85.3
    09:00 EUR Germany IFO Current Assessment Mar 85.7 85.5 85
    09:00 EUR Germany IFO Expectations Mar 87.7 87.9 85.4 85.6
    13:00 USD S&P/CS Composite-20 HPI Y/Y Jan 4.70% 4.60% 4.50%
    13:00 USD Housing Price Index M/M Jan 0.20% 0.20% 0.40% 0.50%
    14:00 USD Consumer Confidence Mar 94.2 98.3
    14:00 USD New Home Sales Feb 682K 657K

     



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  • Global Trends Hit Pause, Consolidations to Follow Until Trump’s Liberation Day

    Global Trends Hit Pause, Consolidations to Follow Until Trump’s Liberation Day


    The dominant trends that shaped Q1 in global markets appear to have run their course, with most major assets entering consolidation phase last week.

    US stocks staged a mild recovery from steep selloff since mid-February, but upside momentum was notably weak. Meanwhile, Dollar, which had been under pressure throughout March, appeared to find a near-term bottom. Resilience of hard economic data in the US somewhat offset persistent concerns over trade disruptions.

    In Europe, Euro and German DAX also lost steam. Optimism over Germany’s historic EUR 500B infrastructure and defense spending plan helped fuel a strong rally earlier in the month, but now traders are starting to price in political and implementation challenges ahead.

    In Asia, sentiment toward China has been broadly positive in recent weeks, driven by policy support and hope for a consumer-led recovery. However, the rally in Hong Kong stocks, in particular, appears stretched.

    Even Gold, after a powerful run to record highs, is struggling to overcome a key medium-term resistance zone.

    What ties these developments together is a growing sense of caution ahead of the highly anticipated reciprocal tariffs set to be unveiled on April 2.

    Market participants remain wary, especially after US President Donald Trump described the date as America’s “liberation day.” His mixed messaging on potential “flexibility” in applying the tariffs — while simultaneously rejecting carveouts — only adds to the confusion and uncertainty.

    In this environment, broad-based risk appetite is likely to stay subdued. While tariff concerns may cap further upside in stocks and restrain Dollar’s rebound, traders are unlikely to make aggressive moves until more clarity emerges in early April.

    For the week, Swiss Franc led the performance chart, followed by Canadian Dollar and the Greenback. Aussie was the weakest, followed by Euro and Yen, while Kiwi and Sterling ended in the middle of the pack.

    Fed Sparks Brief Moves, Markets Consolidate Ahead of April Tariff Showdown

    US stock markets saw a brief bounce following Fed’s decision to keep interest rates unchanged and maintain the median outlook for two rate cuts later this year. However, the optimism quickly faded, with major indexes settling back into their near-term ranges. Investors seemed to digest the Fed’s stance as largely expected, and without any significant surprises to break the prevailing sentiment stalemate.

    The updated Summary of Economic Projections (SEP) hinted at some cautious acknowledgment of the economic toll from trade war. GDP forecasts were revised lower across the board, particularly for 2025 at 1.7%, but remained anchored around Fed’s longer-run estimate of 1.8% growth by 2026 and 2027. On the inflation front, core PCE was nudged higher to 2.8% for this year, up from the previous 2.5%. But projections for 2026 and 2027 held steady at 2.2% and 2.0% respectively.

    Overall, the projections suggest that while tariffs may impact near-term economy activity, Fed sees no long-term deviation from trend growth. Also, Fed expects the inflationary pressure from tariffs to be “transitory”, fading after the initial pass-through period.

    Still, the assumption remains a fragile one. With President Donald Trump’s sweeping reciprocal and sectoral tariff plans due for rollout on April 2, markets are bracing for more clarity—or chaos. The lack of concrete detail on implementation leaves room for policy whiplash, adding to the uncertainty businesses and consumers are already grappling with.

    For now, Fed fund futures imply an 88% chance of a rate cut in June, followed by around 70% odds of another cut in September. Still, those odds remain sensitive to upcoming inflation readings, consumer sentiment, and of course, any fresh headlines out of Washington on trade.

    Technically, DOW gyrated higher last week after forming a short term bottom at 40661.77 earlier in the month. The structure of the recovery so far suggests that it’s merely a corrective bounce. Further decline is expected as long as 55 D EMA (now at 43027.95) holds. Fall from 45054.36 is seen as corrective the whole up trend from 28660.94. On resumption, DOW should target 38.2% retracement of 28660.94 to 45054.36 at 38792.07.

    Similarly, NASDAQ turned sideway after forming a short term bottom at 17238.23. While stronger recovery cannot be ruled out, risk will stay on the downside as long as 55 D EMA (now at 18753.98) holds. Fall from 20204.58 is seen as a correction to the ups trend from 10088.82. Break of 17238.23 will target 38.2% retracement of 10088.82 to 20204.58 at 16340.36.

    Dollar Index should have formed a short term bottom at 103.19 and turned into consolidations already. Further recovery might be seen in the near term. But there would be strong resistance between 55 W EMA (105.21) and 55 D EMA (now at 105.91) to limit upside. Break of 103.19 will resume the fall from 110.17 to 99.57/100.15 support zone.

    Euro and DAX Enter Consolidation as Focus Shifts to German Coalition Talks

    Both Euro and German DAX may have peaked in the near term, as the initial optimism surrounding Germany’s sweeping fiscal expansion plan begins to fade. The EUR 500 B infrastructure and defense package, along with reforms to the long-standing debt brake rule, passed the Bundestag earlier in the week and was approved by the Bundesrat on Friday. With the legislative hurdles cleared, investor attention is now turning to the political process of implementing the plan.

    Chancellor-in-waiting Friedrich Merz is aiming to finalize a coalition with SPD by Easter, but the path forward is far from certain. Migration policy remains a key stumbling block. At the same time, Merz is already facing internal criticism from parts of his CDU/CSU bloc for what some see as an overly generous fiscal shift. These political frictions would be the uncertainty that could weigh on both sentiment and market performance in the coming weeks.

    Even in the absence of external risks like US tariffs, the timeline for tangible economic impact from the spending package remains distant. A regular budget for 2025 may not be passed until mid-year, meaning it could be months before new investments begin to support growth.

    A consolidation phase may now set in for German equities and Euro, lasting at least until Merz completes the coalition negotiations.

    Technically, while DAX still has some room to climb, considering bearish divergence condition in D MACD, upside will likely be limited by 161.8% projection of 14630.21 to 18892.92 from 17024.82 at 23921.87, or in short 24k mark. Break of 22226.34 support will suggest that a correction has started to digest the rally from 17024.82.

    EUR/USD should have completed a short term top at 1.0953 after last week’s pull back. Deeper fall might be seen to 38.2% retracement of 1.0358 to 1.0953 at 1.0726. But strong rebound is expected from there to set the range for a near term corrective pattern.

    China Optimism and HSI Rally Nears Exhaustion, Aussie at Risk

    After weeks of bullish sentiment toward China, markets in Asia may be poised for a meaningful correction. Much of the recent optimism was driven by Beijing’s ambitious “special action plan” to stimulate domestic consumption and the buzz surrounding AI startup DeepSeek. However, as attention shifts from announcements to implementation, investors are turning cautious on whether these initiatives will yield the hoped-for near-term growth.

    In particular, the rally in Hong Kong stocks appears increasingly stretched. HSI had made a strong push higher since January, but it’s now facing a tough hurdle at the psychologically significant 25,000 mark. That level also aligns closely 100% projection of 16964.28 to 23241.74 from 18671.49 at 24948.95. Combined with bearish divergence in daily MACD, there’s a rising risk that profit-taking could be triggered on any failure to break this resistance zone.

    Firm break of 23198.13 support would be a key signal that the rally has topped for the near term, opening the door for deeper pullback toward the 55 D EMA (now at 22302.72) or even below.

    Australian Dollar is especially vulnerable in this bearish scenario, given its strong trade ties with China. Sustained break of near term trend line support (now at 0.6251) will argue that consolidation pattern from 0.6087 has already completed. Further break of 0.6186 support will solidify bearish case and suggest that fall from 0.6941 is ready to resume.

    Gold Correction Looms With Rejection by Key Resistance Zone

    Gold’s impressive record run may have reached a near-term peak as it ran into a confluence of critical resistance zone. The levels include 61.8% projection of 2584.24 to 2956.09 from 2832.41 at 3062.21, and more importantly, medium-term rising channel resistance.

    Sustained break of 55 4H EMA (now at 2993.64) should confirm this view and bring deeper pull back to 2956.09 resistance turned support or a bit lower. But strong support should be seen from 55 D EMA (now at 2862.52) to contain downside, and bring rebound,, at least on first attempt.

    USD/CAD Weekly Outlook

    Range trading continued in USD/CAD last week and outlook is unchanged. Initial bias remains neutral this week first. Overall, price actions from 1.4791 are seen as a corrective pattern. On the upside, break of 1.4541 will extend the second leg from 1.4150 to retest 1.4791 high. On the downside, break of 1.4238 will argue that the third leg has already started through 1.4150 support.

    In the bigger picture, long term up trend is tentatively seen as resuming with prior breach of 1.4667/89 key resistance zone (2020/2015 highs). Next target is 100% projection of 1.2401 to 1.3976 from 1.3418 at 1.4993. This will remain the favored case as long as 1.3976 resistance turned support holds (2022 high), even in case of deep pullback.

    In the longer term picture, up trend from 0.9506 (2007 low) is in progress and possibly resuming. Next target is 61.8% projections of 0.9406 to 1.4689 from 1.2005 at 1.5270. While rejection by 1.4689 will delay the bullish case, further rally will remain in favor as long as 55 M EMA (1.3463) holds.



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  • Canadian Dollar Gains on Inflation Surprise, But Growth Risks Keep Traders Cautious

    Canadian Dollar Gains on Inflation Surprise, But Growth Risks Keep Traders Cautious


    Canadian Dollar edged higher in early US session after much stronger-than-expected inflation data. However, Loonie quickly lost momentum, as investors remained cautious about Canada’s broader economic outlook, particularly in the face of rising trade tensions with the US.

    While higher-than-expected inflation reduces the likelihood of another immediate rate cut, Canada’s economy is under serious pressure due to U.S. tariffs. If upcoming economic indicators, particularly March employment data, show signs of deterioration, it could strengthen the case for BoC to ease policy again. Traders appear hesitant to aggressively push the Loonie higher, as uncertainty remains over how BoC will balance inflation concerns with mounting growth risks.

    For the day so far, Swiss Franc is the strongest performer, followed by Dollar and Loonie. Yen lags behind, followed by Aussie and Sterling. However, outside of Yen’s sharp decline, movements in most currency pairs have been relatively contained, as investors hold positions ahead of key central bank policy announcements in the upcoming days.

    The focus will shift to BoJ during the upcoming Asian session, where it is widely expected to keep interest rates unchanged at 0.50%. While solid GDP growth and robust wage increases support the case for another hike as soon as May, the uncertain global trade outlook and potential volatility in US stock markets could prompt BoJ to delay further tightening until risks are clearer.

    Technically, AUD/JPY’s immediate focus is on 95.50 support turned resistance and 55 D EMA (now at 95.60) in AUD/JPY. Sustained break there should confirm that fall from 102.39 has completed with three waves down to 91.80, as the second leg of the pattern from 90.10. In this case, stronger rally should be seen through 98.75 towards 102.39. However, rejection by the resistance zone will extend the decline from 103.39 to 90.10 low.

    In Europe, at the time of writing, FTSE is up 0.46%. DAX is up 1.18%. CAC is up 0.65%. UK 10-year yield is up 0.034 at 4.683. Germany 10-year yield is up 0.014 at 2.839. Earlier in Asia, Nikkei rose 1.20%. Hong Kong HSI rose 2.46%. China Shanghai SSE rose 0.11%. Singapore Strait Times rose 0.92%. Japan 10-year JGB yield rose 0.003 to 1.506.

    Canada’s CPI surges to 2.6%, growing chance for BoC pause at next meeting

    Canada’s CPI jumped sharply from 1.9% yoy to 2.6% yoy in February, exceeding market expectations of 2.1%. This marks the first time in seven months that inflation has risen above the 2% mid-point of BoC’s target range.

    A key driver of the surge was the expiration of a sales tax break in mid-February, which added to an already broad-based increase in prices. Without the tax impact, inflation would have hit 3.0%. On a monthly basis, CPI rose by 1.1% mom.

    A closer look at the CPI basket shows widespread price increases across multiple categories. Food prices rose 1.3% yoy, while clothing and footwear climbed 1.4% yoy. Transportation costs surged 3.0% yoy, and shelter costs remained significantly elevated, rising 4.2% yoy.

    Core inflation measures also pointed to underlying price pressures. CPI median rose from 2.7% yoy to 2.9% yoy, above expectation of 2.7% yoy. CPI Trimmed rose from 2.7% yoy to 2.9% yoy, above expectation of 2.8% yoy. CPI Common also rose from 2.2% yoy to 2.5% yoy, above expectation of 2.2% yoy.

    German ZEW economic sentiment surges to 51.6 on fiscal optimism

    Germany’s ZEW Economic Sentiment Index surged from 26.0 to 51.6 in March, exceeding expectations of 48.1. However, the Current Situation Index only saw a marginal improvement, rising from -88.5 to -87.6, well below the forecast of -80.5.

    Similarly, in the Eurozone, economic sentiment rose from 24.2 to 39.8, though it missed expectations of 43.6. Current Situation Index barely moved, edging up to -45.2.

    ZEW President Achim Wambach attributed the sharp improvement in economic expectations to positive signals regarding German fiscal policy, particularly the agreement on a multi-billion-euro financial package for the federal budget.

    This stimulus plan has boosted optimism for key industrial sectors, including metal and steel manufacturing and mechanical engineering, which have been struggling with weak demand and global trade uncertainty.

    Another supportive factor for economic optimism has been ECB’s ongoing monetary easing.

    ECB’s Rehn flags growth risks from tariff uncertainty, stays cautious on rate Cuts

    Finnish ECB Governing Council member Olli Rehn acknowledged that US. tariffs and increased uncertainty are “already having adverse effects” on the Eurozone’s economic outlook, with immediate and near-term growth prospects deteriorating.

    However, he pointed out that one offsetting factor could be higher defense spending across Europe, which is expected to provide some support to GDP growth in the medium term.

    Rehn took a cautious stance on further ECB rate cuts, refusing to commit to any specific policy actions given the uncertainty surrounding the economic outlook.

    While inflation in the Eurozone is stabilizing around the 2% target, he noted that risks are “two-sided.” Despite his cautious tone, Rehn pointed to the ECB’s latest projections, which include several more rate cuts this year if the economy and inflation follow the baseline scenario.

    SECO lowers Swiss growth outlook, underperformance to continue fro two more years

    Switzerland’s State Secretariat for Economic Affairs has slightly lowered its growth projections for the economy, reflecting ongoing global trade tensions and economic uncertainty.

    The latest forecast now sees GDP growth at 1.4% in 2025 and 1.6% in 2026, down from the previous estimates of 1.5% and 1.7%, respectively. This means the Swiss economy will likely continue expanding at a pace below its historical average of 1.8%, extending a period of subdued economic momentum for at least two more years.

    SECO emphasized that while the base scenario assumes no full-blown global trade war, some negative effects from current trade frictions are still expected, adding pressure on both investment and economic activity.

    According to SECO, a negative trade scenario—where international economic activity weakens further—would “significantly impact Swiss exports and domestic economic activity”. On the other hand, an upside scenario exists, particularly if Germany successfully implements its massive fiscal package.

    However, for now, SECO believes “downside risks to the economy currently outweigh upside potential”. Also Swiss Franc’s could face upward pressure if downside risks materialize.

    RBA’s Hunter cautious on further rate cuts, Treasurer warns of trade war’s indirect impacts

    RBA Chief Economist and Assistant Governor Sarah Hunter reinforced the central bank’s cautious stance on further rate cuts. She emphasized in a speech today that while the February cut was deemed an appropriate time to “take some restrictiveness away”, the Board were “more cautious than the market about prospects for further easing”.

    Hunter highlighted that US policy settings and their impact on the global economy as “one of the things we are focused on right now.

    She added that policy decisions are always made in uncertain environments, where the baseline forecast is just one of many possible scenarios rather than a strict roadmap for future moves. The link between economic forecasts and rate decisions is “not mechanical”.

    Separately, Australian Treasurer Jim Chalmers acknowledged that the direct impact of US tariffs on Australia is “concerning, but manageable”. But he warned that the larger risk lies in a broader global trade war. He described the current environment as a “new world of uncertainty”, where the spillover effects from rising trade tensions could have far-reaching consequences for Australia’s economy.

    USD/CAD Mid-Day Outlook

    Daily Pivots: (S1) 1.4246; (P) 1.4315; (R1) 1.4355; More…

    Range trading continues in USD/CAD and intraday bias remains neutral. On the downside, break of 1.4238 support will argue that corrective pattern from 1.4791 has started the third leg already. Intraday bias will be back on the downside for 1.4150 support and below. On the upside, though, break of 1.4541 will resume the rebound from 1.4150, as the second leg of the pattern.

    In the bigger picture, long term up trend is tentatively seen as resuming with prior breach of 1.4667/89 key resistance zone (2020/2015 highs). Next target is 100% projection of 1.2401 to 1.3976 from 1.3418 at 1.4993. This will remain the favored case as long as 1.3976 resistance turned support holds (2022 high), even in case of deep pullback.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    04:30 JPY Tertiary Industry Index M/M Jan -0.30% -0.10% 0.10%
    08:00 CHF SECO Economic Forecasts
    10:00 EUR Eurozone Trade Balance (EUR) Jan 14.0B 14.1B 14.6B 14.2B
    10:00 EUR Germany ZEW Economic Sentiment Mar 51.6 48.1 26
    10:00 EUR Germany ZEW Current Situation Mar -87.6 -80.5 -88.5
    10:00 EUR Eurozone ZEW Economic Sentiment Mar 39.8 43.6 24.2
    12:30 CAD CPI M/M Feb 1.10% 0.60% 0.10%
    12:30 CAD CPI Y/Y Feb 2.60% 2.10% 1.90%
    12:30 CAD CPI Median Y/Y Feb 2.90% 2.70% 2.70%
    12:30 CAD CPI Trimmed Y/Y Feb 2.90% 2.80% 2.70%
    12:30 CAD CPI Common Y/Y Feb 2.50% 2.20% 2.20%
    12:30 USD Building Permits Feb 1.46M 1.45M 1.47M
    12:30 USD Housing Starts Feb 1.50M 1.38M 1.37M 1.35M
    12:30 USD Import Price Index M/M Feb 0.40% -0.10% 0.30% 0.40%
    13:15 USD Industrial Production M/M Feb 0.70% 0.20% 0.50%
    13:15 USD Capacity Utilization Feb 78.20% 77.80% 77.80%

     



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  • Dollar Edges Lower Post-Retail Sales, But Cautious Traders Keep Selling Momentum Limited

    Dollar Edges Lower Post-Retail Sales, But Cautious Traders Keep Selling Momentum Limited


    Dollar edged lower in early U.S. trading following weaker-than-expected retail sales data. However, the downside pressure remained limited, as investors took comfort in the fact that February’s sales growth marked a return to expansion after contraction in January. The data helped ease fears of an extended downturn in consumer spending, with markets breathing a sigh of relief that demand has not fallen into a prolonged slump. Still, with Fed’s policy decision and updated economic projections looming midweek, traders remain cautious and hesitant to take aggressive positions.

    Beyond Fed, geopolitical developments are also on investors’ minds. U.S. President Donald Trump indicated he would speak with Russian President Vladimir Putin on Tuesday to discuss potential steps toward ending the war in Ukraine. This follows positive talks between US and Russian officials in Moscow, raising hopes that diplomatic efforts could progress. However, it remains uncertain whether concrete agreements will emerge, and markets will be closely monitoring any developments that could impact global risk sentiment.

    Meanwhile, Euro traders are also in wait-and-see mode, with focus squarely on Germany’s parliamentary vote on Chancellor-in-waiting Friedrich Merz’s proposed state borrowing program tomorrow. The budget committee approved the plans on Sunday, but the vote faces last-minute legal challenges from the far-right Alternative for Germany party, which has petitioned the constitutional court, arguing that there was insufficient time for expert scrutiny. If the challenge gains traction, it could delay or complicate the EUR500B infrastructure and defense spending program.

    Adding to concerns for Germany, the Munich-based Ifo Institute released a bleak economic forecast, predicting that the country’s economy will grow by just 0.2% this year, following two consecutive years of contraction. The report cited weak demand for industrial goods and increasing competitive pressures from global markets as key drags on growth.

    In the currency markets, New Zealand Dollar is currently the strongest performer, followed by Australian Dollar, both of which are benefiting from renewed optimism surrounding China’s “special action plan” to boost consumption. On the other end, Japanese Yen is the weakest, followed by Dollar and Euro. The British pound and Swiss Franc are currently in the middle of the pack.

    Technically, AUD/NZD’s decline from 1.1173 accelerates lower today. Immediate focus is now on 1.0940 cluster support (38.2% retracement of 1.0567 to 1.1177 at 1.0944). Strong rebound from there will keep the up trend from 1.0567 intact for another rally through 1.1177 at a later stage. However, sustained break of 1.0940/4 will complete a double top pattern (1.1177, 1.1173), and indicates bearish trend reversal. Deeper decline should then be seen to 61.8% retracement at 1.0800 next.

    In Europe, at the time of writing, FTSE is up 0.26%. DAX is up 0.26%. CAC is up 0.40%. UK 10-year yield is down -0.023 at 4.651. Germany 10-year yield is down -0.060 at 2.819. Earlier in Asia,Nikkei rose 0.93%. Hong Kong HSI rose 0.77%. China Shanghai SSE rose 0.19%. Singapore Strait Times rose 0.61%. Japan 10-year JGB yield fell -0.025 to 1.503.

    OECD trims global growth outlook amid trade tensions and policy uncertainty

    OECD forecasts a slight slowdown in global economic growth over the next two years, reflecting the effects of escalating trade tensions and heightened policy uncertainty. In its Interim Economic Outlook, OECD projects global growth will ease from 3.2% in 2024 to 3.1% in 2025, and further to 3.0% in 2026. These numbers represent a downgrade from its previous forecasts, which projected 3.3% growth for both this year and next.

    Among advanced economies, the US is expected to lose momentum, with growth forecast at 2.2% in 2025 before cooling to 1.6% in 2026—down from earlier estimates of 2.4% and 2.1%.

    Meanwhile, Eurozone is projected to increase from 1.0% growth this year to 1.2% in 2026. Although this marks an improvement relative to 2024’s mild performance, it still lags the OECD’s previous forecasts of 1.3% and 1.5%.

    The imposition of higher tariffs is expected to weigh particularly heavily on North American economies beyond the US. Canada’s growth rate is set to slow to 0.7% this year and next, well below the 2% previously estimated.

    Mexico would be hit hardest, with its economy forecast to contract by -1.3% in 2025 and a further -0.6% the following year—reversing prior expectations for moderate growth.

    By contrast, China appears relatively well-positioned to manage the fallout from higher tariffs. OECD anticipates that targeted government stimulus will support growth to 4.8% in 2025—slightly above the previous forecast of 4.7%—before moderating to 4.4% in 2026.

    OECD Secretary-General Mathias Cormann warned that signs of weakness are emerging in the global economy, primarily due to “heightened policy uncertainty.” He added that “increasing trade restrictions” will raise costs for both production and consumption.

    US retail sales rises 0.2% mom in Feb, ex-auto sales up 0.3% mom

    US retail sales grew 0.2% mom to USD 722.7B in February, well below expectation of 0.7% mom. Ex-auto sales rose 0.3% mom to USD 584.7B , below expectation of 0.5% mom.

    Ex-gasoline sales rose 0.3% mom. to USD 669.9B. Ex-auto& gasoline sales rose 0.5% mom to USD 627.2B.

    Total sales for December through February period was up 3.8% from the same period a year ago.

    ECB’s de Guindos: Trump’s tariffs complicate ECB’s monetary policy decisions

    ECB Vice President Luis de Guindos acknowledged that US President Donald Trump’s tariff policies have made the central bank’s monetary policy decisions more challenging, creating an environment of increased uncertainty.

    Speaking to Spanish radio Onda Cero, de Guindos noted that the “clarity regarding future decisions” has diminished in a situation “much more opaque than just six months ago.”

    He also pushed back ECB’s inflation target timeline, stating that inflation is now expected to reach the 2% goal in Q1 2026, later than the previous mid-2025 projection, due to the impact of higher energy prices.

    Despite these concerns, de Guindos remained cautiously optimistic that “everything is moving in the right direction.” While tariffs could lead to some short-term inflationary effects, he suggested that slower economic activity resulting from trade disruptions could ultimately offset these pressures over time.

    NZ BNZ services falls to 49.1, slips back into contraction

    New Zealand’s BusinessNZ Performance of Services Index fell back into contraction territory in February, dropping from 50.4 to 49.1. The index remains well below its long-term average of 53.0.

    Key components of the survey also showed deterioration, with Activity/Sales slipping from 53.8 to 49.2, New Orders/Business falling from 50.0 to 49.4, and Stocks/Inventories declining from 50.0 to 48.0. While Employment showed a slight improvement, rising from 47.4 to 48.9, it remains in contraction.

    Despite the sector’s renewed contraction, negative sentiment among businesses showed a modest improvement, with 57.8% of comments in February expressing pessimism, down from 61.9% in January. Most firms cited the challenging economic climate as their primary concern.

    BNZ’s Senior Economist Doug Steel said that “while one might have hoped that the PSI would move higher again, we know that economic turning points can be messy. The brief foray above 50 in January remains the only month in the last year the PSI hasn’t been in contraction”.

    China’s data shows resilient start in 2025, government unveils plan to boost consumption

    China’s economy got off to a stronger-than-expected start in the first two months of the year. Industrial production grew 5.9% yoy, beating market expectations of 5.3% yoy. Retail sales also exceeded forecasts, rising 4.0% yoy compared to an expected 3.8% yoy, reflecting improving consumer demand.

    Meanwhile, fixed asset investment increased by 4.1% yoy, surpassing projections of 3.2% yoy, but ongoing weaknesses in the real estate sector persisted, with property investment falling -9.8% yoy. Additionally, private investment remained flat, signaling that confidence among smaller businesses and private enterprises was subdued.

    China’s National Bureau of Statistics noted that existing and new policies aimed at stimulating growth have begun to take effect, leading to steady expansion in the industrial and services sectors, improved investment, and stable employment conditions. Officials highlighted “new quality productive forces” as key drivers of momentum.

    To further bolster domestic demand, China’s State Council unveiled a “special action plan” over the weekend, aiming to increase household incomes, introduce childcare subsidies, and reduce financial burdens to encourage consumption.

    While the plan was widely circulated across local governments, it lacked concrete details on financial support for implementation, leaving uncertainties about its immediate impact.

    GBP/USD Mid-Day Outlook

    Daily Pivots: (S1) 1.2910; (P) 1.2934; (R1) 1.2958; More…

    GBP/USD bounces slightly today and outlook is unchanged. Further rally is in favor with 1.2860 support intact. On the upside, sustained trading above 61.8% retracement of 1.3433 to 1.2099 at 1.2923 will pave the way back to 1.3433 high. However, break of 1.2860 will indicate short term topping, and turn bias back to the downside for deeper pullback.

    In the bigger picture, up trend from 1.3051 (2022 low) is not completed. Resumption is expected after corrective pattern from 1.3433 completes. Next target will be 1.4248 key resistance. This will now remain the favored case as long as 1.2099 support holds.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    21:30 NZD Business NZ PSI Feb 49.1 50.4
    00:01 GBP Rightmove House Price Index M/M Mar 1.10% 0.50%
    02:00 CNY Industrial Production Y/Y Feb 5.90% 5.30% 6.20%
    02:00 CNY Retail Sales Y/Y Feb 4.00% 3.80% 3.70%
    02:00 CNY Fixed Asset Investment YTD Y/Y Feb 4.10% 3.20% 3.20%
    12:15 CAD Housing Starts Y/Y Feb 229K 249K 240K 239K
    12:30 USD Empire State Manufacturing Index Mar -20 -1.9 5.7
    12:30 USD Retail Sales M/M Feb 0.20% 0.70% -0.90% -1.20%
    12:30 USD Retail Sales ex Autos M/M Feb 0.30% 0.50% -0.40% -0.60%
    14:00 USD NAHB Housing Market Index Mar 43 42

     



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  • China Stimulus Fuels Asian Rally, But Market Caution Persists on US Outlook

    China Stimulus Fuels Asian Rally, But Market Caution Persists on US Outlook


    Asian markets opened the week on a positive note, buoyed by stronger-than-expected economic data from China and optimism surrounding Beijing’s latest efforts to boost domestic consumption. Investors welcomed China’s “special action plan” aimed at stimulating household spending, which aligns with Premier Li Qiang’s government report last week that named consumption growth as a top priority. The latest measures also follow commitments from financial regulators to ease consumer credit quotas and loan terms, signaling a broad push to inject liquidity into the economy and support consumer demand.

    While the plan does not appear to introduce any groundbreaking new policies, its classification as an “action plan” suggests that concrete steps at the local level will soon follow. Given past challenges in reviving domestic demand, this structured approach offers hope that implementation will be more effective than previous, less-defined efforts. Investors appear to be cautiously optimistic that China’s stimulus measures will help stabilize growth, particularly amid continued weakness in real estate and private investment.

    Meanwhile, US futures are trending lower, reflecting growing fears of an impending economic slowdown. Treasury Secretary Scott Bessent’s remarks over the weekend did little to reassure investors, as he acknowledged that there are “no guarantees” the US will avoid a recession. While Bessent emphasized the need to transition away from excessive government spending, his comments about market corrections being “healthy” and his dismissal of recent stock market losses failed to inspire confidence. His focus on tax policy, deregulation, and energy security was seen as a long-term strategy rather than an immediate remedy for economic concerns.

    On the currency front, New Zealand Dollar is currently the strongest performer this month, despite today’s weaker services data. Swiss Franc follows behind, while Australian Dollar takes the third spot. On the weaker side, Canadian Dollar sits at the bottom, trailed by Dollar and British Pound. Meanwhile, Euro and Yen are positioned in the middle.

    Technically, while Hong Kong’s HSI gains today, the broader picture suggests upside momentum is fading, as seen in D MACD. Current rally from 18671.49 may extend higher, but strong resistance is expected around the 25K psychological level, which coincides with 100% projection of 16964.28 to 23241.74 from 18671.49 at 24948.95. Break of 23198.13 support will argue that the a near term correction has already started back to 55 D EMA (now at 21988), or 22k in short.

    In Asia, at the time of writing, Nikkei is up 1.21%. Hong Kong HSI is up 1.37%. China Shanghai SSE is up 0.28%. Singapore Strait Times is up 0.84%. Japan 10-year JGB yield is down -0.011 at 1.517.

    NZ BNZ services falls to 49.1, slips back into contraction

    New Zealand’s BusinessNZ Performance of Services Index fell back into contraction territory in February, dropping from 50.4 to 49.1. The index remains well below its long-term average of 53.0.

    Key components of the survey also showed deterioration, with Activity/Sales slipping from 53.8 to 49.2, New Orders/Business falling from 50.0 to 49.4, and Stocks/Inventories declining from 50.0 to 48.0. While Employment showed a slight improvement, rising from 47.4 to 48.9, it remains in contraction.

    Despite the sector’s renewed contraction, negative sentiment among businesses showed a modest improvement, with 57.8% of comments in February expressing pessimism, down from 61.9% in January. Most firms cited the challenging economic climate as their primary concern.

    BNZ’s Senior Economist Doug Steel said that “while one might have hoped that the PSI would move higher again, we know that economic turning points can be messy. The brief foray above 50 in January remains the only month in the last year the PSI hasn’t been in contraction”.

    China’s data shows resilient start in 2025, government unveils plan to boost consumption

    China’s economy got off to a stronger-than-expected start in the first two months of the year. Industrial production grew 5.9% yoy, beating market expectations of 5.3% yoy. Retail sales also exceeded forecasts, rising 4.0% yoy compared to an expected 3.8% yoy, reflecting improving consumer demand.

    Meanwhile, fixed asset investment increased by 4.1% yoy, surpassing projections of 3.2% yoy, but ongoing weaknesses in the real estate sector persisted, with property investment falling -9.8% yoy. Additionally, private investment remained flat, signaling that confidence among smaller businesses and private enterprises was subdued.

    China’s National Bureau of Statistics noted that existing and new policies aimed at stimulating growth have begun to take effect, leading to steady expansion in the industrial and services sectors, improved investment, and stable employment conditions. Officials highlighted “new quality productive forces” as key drivers of momentum.

    To further bolster domestic demand, China’s State Council unveiled a “special action plan” over the weekend, aiming to increase household incomes, introduce childcare subsidies, and reduce financial burdens to encourage consumption.

    While the plan was widely circulated across local governments, it lacked concrete details on financial support for implementation, leaving uncertainties about its immediate impact.

    ECB’s de Guindos: Trade and geopolitical risks make uncertainty worse than pandemic time

    ECB Vice President Luis de Guindos expressed confidence that inflation is on track to reach the 2% target “the end of this year or the beginning of next.” He added that “all indicators for services and underlying inflation are moving in the right direction.”

    However, he warned that uncertainty in the global economy is “even higher than it was during the pandemic”, with mounting geopolitical risks and shifting trade policies. A key concern is the more protectionist stance of the new US. administration, which de Guindos sees as a major departure from multilateral cooperation. “This is a very important change, and a big source of uncertainty,” he warned.

    Despite improving conditions—real wages rising, inflation easing, and financing conditions loosening—consumption in the Eurozone remains weak. De Guindos attributed this sluggish demand to consumer sentiment, noting that households are hesitant to spend due to fears about the medium-term economic outlook. “The possibility of a trade war or wider geopolitical conflict has an impact on consumer confidence,” he noted.

    On the fiscal front, de Guindos acknowledged the massive defense spending plans by European governments as “certainly a decision in the right direction”. Nevertheless, he cautioned that it’s too early to determine the full economic impact. While increased defense investment is likely to support growth, he believes it will have only a limited effect on inflation.

    Four central banks take center stage amid global data deluge

    Central bank policy decisions will dominate market attention this week, as Fed, BoJ, BoE and SNB each convene to set monetary policy. The announcements come against a backdrop of critical data releases, including inflation figures from Canada and Japan, employment reports from the UK and Australia, retail sales updates from the US and Canada, as well as GDP from New Zealand.

    Fed is widely expected to hold rates steady at 4.25-4.50%, with virtually no chance of a surprise move. While markets anticipate no immediate change, there remains keen interest in the new economic projections. Back in December, the median forecast called for just two rate cuts by year-end, bringing the rate down to 3.75–4.00%. Any downward revision to this path would solidify expectations for a June cut, making it in line with Fed fund futures pricing. Additionally, by the end of 2027, Fed sees rates back at 3.00–3.25%, marginally above the longer-run neutral estimate at 3.00%. Markets will also watch whether Fed’s new projections suggest faster pace of reaching neutral, which would in turn indicate a dovish turn on the economic outlook.

    BoJ is also expected to hold rates steady at 0.50%, with 61 of 62 economists in a recent Reuters poll forecasting no change this week. poll. However, expectations are growing for a rate hike later this year, with 18 of 61 economists predicting a move to 0.75% in Q2, while 40 of 57 see it happening in Q3. The timing will largely depend on wage negotiations, which has so far been strong. Many of Japan’s largest corporations already met union demands for significant pay raises. This raises the possibility of an earlier-than-expected hike, and markets will be looking for any guidance from BoJ Governor Kazuo Ueda regarding the bank’s next steps.

    BoE will also hold rates steady at 4.50%, maintaining its measured approach of one 25bps cut per quarter. Inflation expectations remain sticky, with the latest BoE survey showing that five-year inflation expectations rose to 3.6% in February, up from 3.4% in November—the highest level since 2019. This could keep the majority of the MPC hesitant to ease policy further prematurely. The key question at this meeting will be whether more members join Catherine Mann and Swati Dhingra in voting for a more aggressive loosening of monetary policy.

    In contrast, SNB is forecast to cut its key policy rate by another 25bps, bringing it down to 0.25%. Swiss inflation dropped to just 0.3% in February, the lowest since April 2021, which strengthens the argument for another rate cut. With inflation now sitting at the lower end of the 0-2% target range, policymakers are likely to lower rates further to prevent a deflationary environment. Market expectations suggest that there is already a 20% probability that SNB will cut rates again in June, bringing interest rates down to 0%.

    Here are some highlights for the week:

    • Monday: New Zealand BNZ services; China industrial production, retail sales, fixed asset investment; Canada housing starts; US retail sales, Empire State manufacturing, business inventories, NAHB housing index.
    • Tuesday: Japan tertiary industry index; Germany ZEW economic sentiment; Eurozone trade balance; Canada CPI; US housing starts and building permits, industrial production.
    • Wednesday: New Zealand current account; Japan BoJ rate decision, trade balance, machine orders; Eurozone CPI final; Fed rate decision.
    • Thursday: New Zealand GDP; Australia employment; SNB rate decision, Swiss trade balance; Germany PPI; BoE rate decision, UK employment; Canada IPPI and RMPI; US jobless claims, Philly Fed survey, current account, existing home sales.
    • Friday: New Zealand trade balance; Japan CPI; UK Gfk consumer confidence; Eurozone current account; Canada retail sales, new housing price index.

    AUD/USD Daily Report

    Daily Pivots: (S1) 0.6292; (P) 0.6312; (R1) 0.6345; More…

    Intraday bias in AUD/USD remains neutral first as range trading continues. On the downside, break of 0.6186 will target 0.6087 support first. Firm break there will resume whole decline from 0.6941. On the upside, sustained break of 0.6407 will resume the rebound from 0.6087 to 100% projection of 0.6087 to 0.6407 from 0.6186 at 0.6506, even still as a corrective move.

    In the bigger picture, fall from 0.6941 (2024 high) is seen as part of the down trend from 0.8006 (2021 high). Next medium term target is 61.8% projection of 0.8006 to 0.6169 from 0.6941 at 0.5806. In any case, outlook will stay bearish as long as 55 W EMA (now at 0.6482) holds.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    21:30 NZD Business NZ PSI Feb 49.1 50.4
    00:01 GBP Rightmove House Price Index M/M Mar 1.10% 0.50%
    02:00 CNY Industrial Production Y/Y Feb 5.90% 5.30% 6.20%
    02:00 CNY Retail Sales Y/Y Feb 4.00% 3.80% 3.70%
    02:00 CNY Fixed Asset Investment YTD Y/Y Feb 4.10% 3.20% 3.20%
    12:15 CAD Housing Starts Y/Y Feb 249K 240K
    12:30 USD Empire State Manufacturing Index Mar -1.9 5.7
    12:30 USD Retail Sales M/M Feb 0.70% -0.90%
    12:30 USD Retail Sales ex Autos M/M Feb 0.50% -0.40%
    14:00 USD NAHB Housing Market Index Mar 43 42

     



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  • Recession Fears Weigh on Markets as Risk-Off Trade Intensifies

    Recession Fears Weigh on Markets as Risk-Off Trade Intensifies


    The risk-off sentiment that triggered the biggest US stock market selloff in months has spilled over into Asian markets, leading to broad declines across the region. The currency markets reflect this shift too, with traditional safe havens such as Japanese Yen and Swiss franc leading gains in Asia, while risk-sensitive currencies like the Australian and New Zealand Dollars face pressure.

    Unlike previous bouts of risk aversion, Dollar is not benefiting from the current flight to safety. This time, the core of the problem originates from the US economy itself, where recession worries are intensifying. Rather than flocking to the greenback, investors appear to be diversifying into other safe havens or moving to the sidelines until the dust settles.

    The uncertainty surrounding US trade policies has left businesses and consumers hesitant, potentially dragging economic growth lower. In response to the changing economic outlook, market participants are increasingly convinced that Fed will resume policy easing within the first half of the year. The only question is whether the next rate cut will arrive in May or June.

    Another driver of Dollar weakness is the extending decline in yields since mid January. Technically, there is prospect for 10-year yield to draw support from 4.000 psychological level, which is slightly below 61.8% retracement of 3.603 to 4.809 at 4.063, to form a near term bottom. However, there is little prospect for 10-year yield to rebound strongly through 55 D EMA (now at 4.412). But at least, sideway movement in 10-year yield could help lift the pressure on Dollar.

    Overall for the week so far, Yen is the best performer, followed by Euro, and then Swiss Franc. Aussie is the worst, followed by Loonie and then Kiwi. Dollar and Sterling are positioning in the middle.

    In Asia, at the time of writing, Nikkei is down -1.02%. Hong Kong HSI is down -1.02%. China Shanghai SSE is down -0.50%. Singapore Strait Times is down -2.02%. Japan 10-year JGB yield is down -0.063 at 1.509. Overnight, DOW fell -2.08%. S&P 500 fell -2.70%. NASDAQ fell -4.00%. 10-year yield fell -0.104 to 4.213.

    US stock market correction deepens as recession fears take hold

    The US stock market suffered its most significant setback in months, with the S&P 500 dropping -2.7%, its biggest one-day decline since December 18. NASDAQ also lost -4.0%, marking its worst single-day percentage loss since September 2022. Analysts widely point to mounting recession worries as the primary catalyst behind the selloff.

    Initial concerns emerged over the past month following a series of weaker economic data points, believed by some to be early reactions to an increasingly contentious tariff policy. These worries intensified after recent remarks from the White House suggested a bumpy economic outlook ahead.

    In an interview aired on Sunday, US President Donald Trump fueled apprehensions further by describing the economy as going through “a period of transition.” When pressed about an impending recession, he avoided a direct prediction but acknowledged potential “disruption.” His remarks—“Look, we’re going to have disruption, but we’re OK with that”—did little to reassure investors already on edge about growth prospects.

    Adding further weight to recession fears, historical bond market indicators have been flashing warning signs. The 10-year to 2-year US yield curve inverted in mid-2022—a classic recession signal—and only turned positive again in September 2024. Historically, a U.S. recession tends to follow within months after the yield curve normalizes (i.e., turned positive again). If this trend holds true, the US economy could be inching closer to a downturn.

    However, another view posits that tariffs are a distraction and that the real driver behind the US selloff is the recent surge in Japanese government bond yields, which have hit a 16-year high. As the carry trade unwinds—where investors borrow in low-yield currencies, often involving Japanese Yen, to fund investments in higher-yield or high-growth assets—capital is flowing out of big tech names, contributing to the NASDAQ’s outsized losses.

    Technically, NASDAQ’s strong break of 55 W EMA (now at 17864.01) suggests that it’s already in correction to the up trend from 10088.82 (2022 low). Deeper fall should be seen to 38.2% retracement of 10088.82 to 20204.58 at 16340.36. Reaction from there will decide whether it’s merely in a medium consolidations phase or in an out-right bearish trend reversal.

    As for DOW, immediate focus is now on 41844.89 support. Firm break there will complete a double top reversal pattern (45073.63, 45054.36). That should set up deeper fall to 38.2% retracement of 32327.20 to 45073.63 at 40204.49 at least, even it’s just a correction to the rise from 32327.20.

    Australia Westpac consumer sentiment jumps to 95.9, soft landing achieved

    Australian consumer sentiment saw a strong rebound in March, with Westpac Consumer Sentiment Index jumping 4.0% mom to 95.9, the highest level in three years and not far from neutral 100 mark.

    Westpac attributed the improvement to slowing inflation and February’s RBA interest rate cut which have lifted confidence across households. positive views on job security suggest that “soft landing has been achieved”. Nevertheless, “unsettling overseas news” continues to weigh on the broader economic outlook.

    Looking ahead to RBA’s upcoming meeting on March 31-April 1, Westpac expects the central bank to keep the cash rate unchanged. RBA was clear that the 25bps cut in February “did not mean further reductions could be expected at subsequent meetings.”

    Westpac added, “further slowing in inflation will give the RBA sufficient confidence to deliver more rate cuts this year with the next move coming at the May meeting”.

    Australia’s NAB business confidence slips back into negative as cost pressures persist

    Australia’s NAB Business Confidence fell from 5 to -1 in February, erasing last month’s gain and returning to below-average levels. While business conditions improved slightly from 3 to 4, the decline in confidence suggests that businesses remain cautious despite RBA’s recent rate cut and positive Q4 GDP data.

    NAB Chief Economist Alan Oster noted that the lift in sentiment seen in January was not sustained, signaling ongoing uncertainty in the business environment. Persistent cost pressures and subdued profitability appear to be key factors weighing on sentiment, keeping confidence below long-term norms.

    Within business conditions, trading conditions ticked up from 7 to 8, and profitability conditions rose slightly from -2 to -1, though still remaining in negative territory. Employment conditions, however, weakened from 5 to 4.

    Cost pressures remain a concern, with purchase cost growth accelerating from 1.1% to 1.5% in quarterly equivalent terms. On the positive side, labor cost growth eased from 1.7% to 1.5%, indicating that wage price pressures are gradually cooling. Meanwhile, final product price growth slowed from 0.8% to 0.5%, though retail price inflation held steady at 1.0%.

    EUR/AUD Daily Outlook

    Daily Pivots: (S1) 1.7149; (P) 1.7213; (R1) 1.7320; More…

    EUR/AUD’s rally resumed and brief consolidations and intraday is back on the upside. Rise from 1.6335 should now target 161.8% projection of 1.5963 to 1.6800 from 1.6355 at 1.7709 next. On the downside, below 1.7102 minor support will turn intraday bias neutral again and bring consolidations, before staging another rally.

    In the bigger picture, up trend from 1.4281 (2022 low) is resuming. Sustained trading above 1.7180 key resistance will pave the way to 61.8% projection of 1.4281 to 1.7062 from 1.5963 at 1.7682, which is also close to 61.8% retracement of 1.9799 (2020 high) to 1.4281 at 1.7691. For now, this will remain the favored case as long as 1.6355 support holds, even in case of deep pullback.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    21:45 NZD Manufacturing Sales Q4 2.60% -1.20% 0.20%
    23:30 AUD Westpac Consumer Confidence Mar 4.00% 0.10%
    23:30 JPY Overall Household Spending Y/Y Jan 0.80% 3.60% 2.70%
    23:50 JPY GDP Q/Q Q4 F 0.60% 0.70% 0.70%
    23:50 JPY GDP Deflator Y/Y Q4 F 2.90% 2.80% 2.80%
    23:50 JPY Money Supply M2+CD Y/Y Feb 1.20% 1.40% 1.30%
    00:30 AUD NAB Business Confidence Feb -1 4 5
    00:30 AUD NAB Business Conditions Feb 4 3
    06:00 JPY Machine Tool Orders Y/Y Feb P 4.70%
    10:00 USD NFIB Business Optimism Index Feb 101 102.8

     



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  • Dollar Stays Soft as Forex Markets Quiet, US CPI Highlights the Week

    Dollar Stays Soft as Forex Markets Quiet, US CPI Highlights the Week


    Forex markets are trading quietly in the Asian session, remaining within Friday’s range and showing little impetus to move decisively in either direction. Dollar is staying on the back foot, with a lack of substantial buying interest to sustain a meaningful rebound. While last week’s non-farm payroll data helped calm fears of a rapid labor market slowdown, market sentiment remains cautious in the face of escalating uncertainties.

    Late last Friday, Morgan Stanley lowered its 2025 economic growth forecast for the US and highlighted mounting concerns about trade tensions. The bank noted that “earlier and broader tariffs should translate into softer growth this year.” In contrast to its previous assumption that any tariff-related drag on growth would be more pronounced in 2026. Morgan Stanley now projects Q4/Q4 2025 growth at 1.5% (down from 1.9%), and 2026 growth at 1.2% (down from 1.3%).

    Goldman Sachs also joined the wave of downward revisions, cutting its 2025 Q4/Q4 GDP growth forecast from 2.2% to 1.7%. Moreover, it raised its 12-month recession probability to 20%. While the odd is still low, it’s a noticeable shift from the previously estimated 15%.

    So far this month, Dollar is the weakest performer among the major currencies. It is trailed by Canadian Dollar and then Australian Dollar. On the other end, Euro leads the pack, followed by Swiss Franc and then British Pound, indicating broad European strength in the current environment. Both Yen and New Zealand Dollar hold the middle ground.

    Looking ahead, the upcoming US CPI release will be the major data focal point this week Meanwhile, BoC is widely expected to deliver another rate cut. UK GDP data will also be a feature.

    Technically, AUD/NZD appears to be building up downside momentum as seen in D MACD. Break of 1.1001 support will pace the way to 1.0940 cluster support zone (38.2% retracement of 1.0567 to 1.1177 at 1.0944). Such development would give Aussie some additional pressure elsewhere.

    In Asia, at the time of writing, Nikkei is up 0.47%. Hong Kong HSI is down -1.53%. China Shanghai SSE is down -0.37%. Singapore Strait Times is down -0.52.

     

    Japan’s nominal wages rises 2.8% yoy in Jan, real wages fall -1.8% yoy

    Japan’s labor cash earnings rose 2.8% yoy in January, falling short of market expectations of 3.2% yoy. Nominal wage growth remained positive for the 37th month.

    Real wages, adjusted for inflation, fell -1.8% yoy, reversing two months of slight gains. The decline was largely driven by a sharp rise in consumer inflation.

    The inflation rate used by the Ministry of Health, Labor and Welfare to calculate real wages—which includes fresh food prices but excludes rent—accelerated to 4.7% yoy, its highest level since January 2023.

    Regular pay, or base salary, rose 3.1% yoy, the largest gain since 1992. This was overshadowed by a sharp -3.7% yoy decline in special payments, which consist largely of one-off bonuses.

    China’s inflation turns negative, but seasonal factors skew the picture

    Released over the weekend, China’s consumer inflation dipped into negative territory for the first time in over a year, with February’s CPI coming in at -0.7% yoy, weaker than the expected -0.5% yoy, and a sharp reversal from January’s 0.5% yoy gain.

    Core CPI, which strips out food and energy prices, also slipped by -0.1% yoy—its first decline since January 2021—signaling weak underlying demand.

    On a month-over-month basis, consumer prices fell -0.2%, more than the expected -0.1%, reversing some of January’s 0.7% increase.

    While the decline may raise concerns about deflationary pressures, NBS attributed much of the drop to seasonal distortions tied to the timing of the Lunar New Year. Stripping out this factor, NBS estimates that CPI actually rose 0.1% yoy.

    Given these distortions, a clearer picture of China’s inflation trajectory will likely emerge in March when seasonal effects fade.

    Meanwhile, producer prices remained in contraction for the 29th consecutive month, with PPU declining -2.2% yoy, slightly better than January’s -2.3% yoy but still below expectations of -2.1% yoy.

    BoC rate cut, US inflation and consumer sentiment

    Expectations for BoC to continue easing policy have surged following weak February job data, which showed that tariff-related uncertainty is already taking a toll on employment. Markets now widely expect BoC to lower its policy rate by another 25bps this week to to 2.75%, This would serve as an insurance move against further trade disruptions. With inflation well-contained, some analysts believe the central bank would continue cutting at this pace in upcoming meetings until rates reach 2%.

    BoC’s rhetoric will be closely scrutinized to gauge how policymakers assess the risks posed by tariffs and trade disputes. If the central bank signals greater concern over the economic fallout, expectations for a sustained easing cycle will strengthen. The stance will be critical in shaping near-term movements in Canadian Dollar, which has just had a roller-coaster ride last week on tariff news.

    Looking south, US inflation data are another pivot point for global markets. Both headline and core CPI rates are expected to edge lower, from 3.0% to 2.9% and from 3.3% to 3.2%, respectively. Yet the outcome remains uncertain due to possible tariff-induced price hikes—or, conversely, weaker consumption dampening inflation. With a surprise in either direction, Fed’s near-term policy path could be thrown into disarray. March is still widely expected to be a hold, but May is increasingly up in the air.

    Adding to the US economic picture is the University of Michigan consumer sentiment survey, which carries added significance. The recent stock market selloff was closely tied to poor January consumer sentiment. Any notable deterioration in confidence could drive renewed risk aversion, compounding existing concerns about trade and growth.

    Elsewhere, other key data, including UK GDP, Japan cash earnings, and household spending, will round out a relatively less busy week for global markets.

    Here are some highlights for the week:

    • Monday: Japan average cash earnings; Germany industrial production, trade balance; Swiss SECO consumer climate; Eurozone Sentix investor confidence.
    • Tuesday: New Zealand manufacturing sales; Australia Westpac consumer sentiment, NAB business sentiment; Japan household spending, GDP final.
    • Wednesday: Japan BSI manufacturing, PPI; US CPI, BoC rate decision.
    • Thursday: Swiss PPI; Eurozone industrial production; US PPI, jobless claims.
    • Friday: New Zealand BNZ manufacturing; Germany GDP final; UK GDP, production, goods trade balance; Canada manufacturing sales, wholesale sales; US U of Michigan consumer sentiment.

    USD/JPY Daily Outlook

    Daily Pivots: (S1) 147.26; (P) 147.73; (R1) 148.51; More…

    Intraday bias in USD/JPY stays on the downside at this point. Sustained trading below 61.8% retracement of 139.57 to 158.86 at 146.32 will pave the way to 139.57 support. On the upside, 149.32 minor resistance will turn intraday bias neutral and bring consolidations again, before staging another fall.

    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.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    23:30 JPY Labor Cash Earnings Y/Y Jan 2.80% 3.20% 4.80% 4.40%
    23:50 JPY Bank Lending Y/Y Feb 3.10% 3.10% 3% 2.90%
    23:50 JPY Current Account (JPY) Jan 1.94T 1.99T 2.73T
    05:00 JPY Leading Economic Index Jan P 108 108.1 108.4 108.3
    05:00 JPY Eco Watchers Survey: Current Feb 48.5 48.6
    07:00 EUR Germany Industrial Production M/M Jan 1.50% -2.40%
    07:00 EUR Germany Trade Balance (EUR) Jan 21.2B 20.7B
    09:30 EUR Eurozone Sentix Investor Confidence Mar -10 -12.7

     



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  • “Coalition of the Willing” Fuels Euro Strength, Boosts Defense Outlook

    “Coalition of the Willing” Fuels Euro Strength, Boosts Defense Outlook


    European markets saw a strong rally today, with notable fund inflows driving gains in DAX and Euro. Investor sentiment was boosted by expectations of increased military spending after the announcement of the UK and France-led “Coalition of the Willing” to support Ukraine. FTSE and Sterling also benefited from the renewed optimism, as traders priced in the broader economic implications of higher defense expenditures across Europe.

    Defense stocks led the charge, as recent geopolitical developments, in particular the Trump-Zelenskiy clash in the Oval Office, pointed to the beginning of a European rearmament cycle. With growing isolationism in the US under President Donald Trump, European nations appear to be shifting toward greater self-reliance in military production, reducing dependence on the US. This shift has fueled expectations of long-term defense budget expansions, providing fresh momentum for European economies.

    Meanwhile, the latest Eurozone inflation data provided a mix of signals for policymakers at ECB. Prices growth did decelerate slightly in February, an outcome that might please the doves. However, the slowdown probably isn’t enough to change please the hawks for letting guard off inflation risk.. Policymakers are still certain to continue their measured approach to rate cuts with another 25bps reduction this week. But the data will spark fresh debate over the pace and extent of easing beyond the decision.

    Overall in the currency markets, Euro is the best performer for the day so far, followed by Sterling, and then Aussie. Yen is the worst, followed by Dollar, and then Kiwi, Loonie and Kiwi are positioning in the middle.

    Technically EUR/AUD’s break of 1.6800 resistance should confirm resumption of whole rally from 1.5693. Further rise should be seen to 61.8% projection of 1.5963 to 136800 from 1.6355 at 1.6872. Decisive break there could prompt upside acceleration to 100% projection at 1.7192. Nevertheless, break of 1.6702 support will delay the bullish case and bring consolidations first.

    In Europe, at the time of writing, FTSE is up 0.77%. DAX is up 2.33%. CAC is up 1.43%. UK 10-year yield is up 0.052 at 4.537. Germany 10-year yield is up 0.091 at 2.502. Earlier in Asia, Nikkei rose 1.70%. Hong Kong HSI rose 0.28%. China Shanghai SSE fell -0.12%. Singapore Strait Times rose 0.34%. Japan 10-year JGB yield rose 0.034 to 1.410.

    Eurozone CPI falls to 2.4%, core CPI slows to 2.6%, both above expectations

    Eurozone CPI ticked down from 2.5% yoy to 2.4% yoy in February, above expectation of 2.3% yoy. Core CPI (ex-energy, food, alcohol & tobacco), fell from 2.7% yoy to 2.6% yoy, above expectation of 2.5% yoy.

    Looking at the main components of inflation, services is expected to have the highest annual rate in February (3.7%, compared with 3.9% in January), followed by food, alcohol & tobacco (2.7%, compared with 2.3% in January), non-energy industrial goods (0.6%, compared with 0.5% in January) and energy (0.2%, compared with 1.9% in January).

    Eurozone PMI manufacturing finalized at 47.6, a 24-mth high

    Eurozone manufacturing activity showed signs of stabilization in February, with PMI finalized at 47.6, a 24-month high, up from January’s 46.6. While still in contraction territory, the improvement offers some hope that the sector may be finding its footing.

    Among individual countries, Ireland led the rankings at 51.9, marking a 12-month high, while the Netherlands reached the neutral 50.0 mark for the first time in eight months. However, Spain dipped to a 13-month low at 49.7, and Italy, Austria, Germany, and France all remained below 50, despite showing some improvement.

    Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, emphasized that while the data is encouraging, it’s “too early to call it a recovery”. New orders are still falling but at the slowest rate since May 2022, and production is inching closer to stabilization. After nearly three years of recession, there is potential for modest growth in the coming months.

    Despite ongoing risks, most businesses remain optimistic about the future, with confidence slightly above its long-term average. This resilience is notable, given the looming threat of US tariffs. Additional positive factors include hopes that Russia’s war in Ukraine could come to an end this year, alongside expectations of greater political stability in Germany following the recent elections.

    UK PMI manufacturing finalized at 46.9, job cuts accelerate

    The UK manufacturing sector continued to struggle in February, with PMI Manufacturing finalized at 46.9, down from January’s 48.3, marking a 14-month low. Weak demand and declining confidence among clients have exacerbated the downturn, leading to falling output and new orders.

    Rob Dobson, Director at S&P Global Market Intelligence, noted that UK manufacturers are facing an “increasingly difficult trading environment.” The combination of subdued demand, rising cost pressures, and uncertainty over future economic conditions is making it harder for firms to sustain growth.

    Inflation fears are also rising, particularly due to changes in the national minimum wage and employer NICs announced in the Autumn Budget.

    One of the most concerning trends is the acceleration in job losses. The pace of staff reductions in the sector is now at levels not seen since the pandemic-induced slump in mid-2020.

    Japan’s PMI manufacturing finalized at 49 in Feb, modest improvement but outlook remains weak

    Japan’s manufacturing sector showed slight improvement in February, with PMI finalized at 49.0, up from 48.7 in January. However, the sector remains in contraction territory, reflecting ongoing struggles with weak demand.

    According to Usamah Bhatti at S&P Global Market Intelligence, manufacturers cited soft global and domestic demand, with “muted conditions” in key markets such as the US, Europe, and China. Additionally, purchasing activity saw a solid and sustained decline.

    The “near-term outlook remains clouded”. Business confidence fell to its lowest level since mid-2020, driven by growing concerns over the impact of US trade policies and a slower-than-expected global economic recovery.

    China’s Caixin PMI manufacturing rises to 50.8, but employment remains a concern

    China’s Caixin PMI Manufacturing climbed to 50.8 in February, up from 50.1, exceeding expectations of 50.3.

    Wang Zhe, Senior Economist at Caixin Insight Group, noted that new export orders rebounded, corporate purchasing increased, and logistics remained smooth. However, employment continued to decline, and output prices stayed weak.

    Additionally, official PMI data released over the weekend further reinforced signs of recovery. The official PMI Manufacturing rebounded from 49.1 to 50.2, marking its highest level since November and moving back into expansionary territory. Additionally, the non-manufacturing PMI, which covers services and construction, ticked up to 50.4 from 50.2.

    EUR/USD Mid-Day Outlook

    Daily Pivots: (S1) 1.0350; (P) 1.0385; (R1) 1.0410; More…

    EUR/USD’s strong rebound today is mixing up the near term outlook. But still, intraday bias stays neutral and further decline is in favor as long as 38.2% retracement of 1.1213 to 1.0176 at 1.0572 holds. Below 1.0358 will target 1.0176/0210 support zone first. Firm break there will resume whole fall from 1.1213, and carry larger bearish implications. However, sustained trading above 1.0572 will pave the way to 61.8% retracement at 1.0817.

    In the bigger picture, immediate focus is on 61.8 retracement of 0.9534 (2022 low) to 1.1274 (2024 high) at 1.0199. Sustained break there will solidify the case of medium term bearish trend reversal, and pave the way back to 0.9534. However, reversal from 1.0199 will argue that price actions from 1.1274 are merely a corrective pattern, and has already completed.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    21:45 NZD Terms of Trade Index Q4 3.10% 1.50% 2.40% 2.50%
    00:00 AUD TD-MI Inflation Gauge M/M Feb -0.20% 0.10%
    00:30 JPY Manufacturing PMI Feb F 49 48.9 48.9
    01:45 CNY Caixin Manufacturing PMI Feb 50.8 50.3 50.1
    08:30 CHF Manufacturing PMI Feb 49.6 48.4 47.5
    08:50 EUR France Manufacturing PMI Feb F 45.8 45.5 45.5
    08:55 EUR Germany Manufacturing PMI Feb F 46.5 46.1 46.1
    09:00 EUR Eurozone Manufacturing PMI Feb F 47.6 47.3 47.3
    09:30 GBP Manufacturing PMI Feb F 46.9 46.4 46.4
    09:30 GBP M4 Money Supply M/M Jan 1.30% 0.20% 0.10%
    09:30 GBP Mortgage Approvals Jan 66K 66K 67K
    10:00 EUR Eurozone CPI Y/Y Feb P 2.40% 2.30% 2.50%
    10:00 EUR Eurozone CPI Core Y/Y Feb P 2.60% 2.50% 2.70%
    14:30 CAD Manufacturing PMI Feb 51.6
    14:45 USD Manufacturing PMI Feb F 51.6 51.6
    15:00 USD ISM Manufacturing PMI Feb 50.8 50.9
    15:00 USD ISM Manufacturing Prices Paid Feb 56.2 54.9
    15:00 USD ISM Manufacturing Employment Feb 50.3
    15:00 USD Construction Spending M/M Jan -0.10% 0.50%

     



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  • Bitcoin Roars Back as Trump Plans Strategic Crypto Reserve; Tariffs, Geopolitics, NFP and ECB to Move Markets

    Bitcoin Roars Back as Trump Plans Strategic Crypto Reserve; Tariffs, Geopolitics, NFP and ECB to Move Markets


    Bitcoin led the charge in an otherwise quiet Asian session, rebounding over 20% from last week’s low after a major announcement from US President Donald Trump. The cryptocurrency sector saw dramatic relief from its steep selloff last week, as Trump revealed the creation of a strategic crypto reserve, including Bitcoin, Solana, XRP, and other digital assets.

    The wording of the post also drew attention, with Trump emphasizing that BTC and ETH would be at the “heart of the reserve.” Unlike a simple stockpile, which implies holding onto existing government-owned crypto assets, a reserve suggests active purchases in regular installments.

    However, the move has not been without criticism. Crypto purists argue that Bitcoin and other decentralized assets were created to exist outside government control, and they reject the notion of a nation-state amassing a large share of the market. Some others see the announcement as politically motivated rather than a structural shift in policy, raising concerns about long-term regulatory implications.

    Technically, Bitcoin’s strong rebound ahead of 73812 cluster zone (38.2% retracement of 15452 to 109571 at 73617) suggests that price actions from 10957 are likely forming a medium term consolidation pattern only, rather than bearish trend reversal. Sustained trading above 55 D EMA (now at 95271) will solidify this bullish case, and extend range trading below 109571 for a while before eventual upside breakout.

    Meanwhile, in the currency markets, Euro is leading gains, followed by Sterling and Aussie. Dollar is the worst performer, trailed by Kiwi and Yen. Swiss Franc and Loonie are positioning in the middle.

    Looking ahead, multiple US tariffs on Canada, Mexico, and China are set to take effect on Tuesday, March 4, and speculation is mounting over retaliatory measures. China has already hinted at countermeasures, including tariffs on U.S. agricultural products and non-tariff barriers.

    On the geopolitical front, all eyes will be on the US response to a new UK-EU effort to draft a Ukraine peace plan, a move coming on the heels of President Volodymyr Zelenskiy’s high-profile clash with Trump at the Oval Office just two days ago.

    In addition, crucial US economic data, including non-farm payrolls and ISM manufacturing and services indexes, will be closely watched. Across the Atlantic, ECB is expected to cut interest rates again this week, continuing its “regular, gradual” easing.

    In Asia, at the time of writing, Nikkei is up 1.70%. Hong Kong HSI is up 1.30%. China Shanghai SSE is up 0.32%. Singapore Strait Times is up 0.47%. Japan 10-year JGB yield is up 0.029 at 1.405.

    Japan’s PMI manufacturing finalized at 49 in Feb, modest improvement but outlook remains weak

    Japan’s manufacturing sector showed slight improvement in February, with PMI finalized at 49.0, up from 48.7 in January. However, the sector remains in contraction territory, reflecting ongoing struggles with weak demand.

    According to Usamah Bhatti at S&P Global Market Intelligence, manufacturers cited soft global and domestic demand, with “muted conditions” in key markets such as the US, Europe, and China. Additionally, purchasing activity saw a solid and sustained decline.

    The “near-term outlook remains clouded”. Business confidence fell to its lowest level since mid-2020, driven by growing concerns over the impact of US trade policies and a slower-than-expected global economic recovery.

    China’s Caixin PMI manufacturing rises to 50.8, but employment remains a concern

    China’s Caixin PMI Manufacturing climbed to 50.8 in February, up from 50.1, exceeding expectations of 50.3.

    Wang Zhe, Senior Economist at Caixin Insight Group, noted that new export orders rebounded, corporate purchasing increased, and logistics remained smooth. However, employment continued to decline, and output prices stayed weak.

    Additionally, official PMI data released over the weekend further reinforced signs of recovery. The official PMI Manufacturing rebounded from 49.1 to 50.2, marking its highest level since November and moving back into expansionary territory. Additionally, the non-manufacturing PMI, which covers services and construction, ticked up to 50.4 from 50.2.

    Market sentiment hinges on US NFP, ECB cut and other data to watch

    While trade war and geopolitics might continue to dominate headlines, key economic events this week could also inject extra volatility into the markets.

    The week’s most significant market-moving event could come from the US. February non-farm payrolls report will be a crucial test for investor sentiment, particularly after recent economic data—including consumer confidence, business activity, and retail sales—showed signs of weakness. Additionally, ISM manufacturing and services data will provide further insight into business conditions. The impact of tariffs on the economy is beginning to surface in economic data, and a set of disappointing data could amplify the emerging concerns.

    It should noted that while a softer NFP print could bring forward expectations for a Fed rate cut, optimism about policy easing may be overshadowed by broader economic worries, which would drive further volatility across asset classes. The key is whether the job market can hold up against growing uncertainty, or if fears of a sharper slowdown will escalate.

    ECB is widely anticipated to proceed with its “regular, gradual” approach to policy easing at its meeting this week, with a 25bps cut to the deposit rate, bringing it down to 2.50%. The latest Economic Bulletin suggests policymakers see neutral rate in the range of 1.75%-2.25%, implying that further rate reductions beyond this week’s move will be calculated cautiously.

    Analysts largely expect two more 25bps cuts by ECB in Q2 to bring an end to the cycle. But the outcome could vary depending on economic growth and inflation developments. Markets will closely analyze ECB’s updated economic projections hints on the central bank’s view, at least the base case.

    Eurozone inflation data will also be in the spotlight. February’s flash CPI is expected to show headline inflation falling to 2.3%, following four consecutive months of increases. Core inflation, which has remained at 2.7% for five straight months, is projected to ease to 2.5%.

    Beyond the US and Eurozone, Australia will also be in focus. Although RBA initiated its easing cycle in February, policymakers have remained cautious about further cuts. RBA meeting minutes will provide more details on the board’s thinking regarding the next steps. Additionally, Australia’s Q4 GDP and January retail sales data will offer insight into whether more imminent easing is necessary.

    Other key data releases include Canada’s employment report and China’s Caixin PMIs.

    Here are some highlights for the week

    • Monday: Japan PMI manufacturing final; China Caixin PMI manufacturing; Swiss PMI manufacturing; Eurozone CPI flash, PMI manufacturing final; UK PMI manufacturing final; Canada PMI manufacturing; US ISM manufacturing, construction spending.
    • Tuesday: New Zealand building permits; Japan unemployment rate, capital spending, monetary base, consumer confidence; Australia RBA minutes, retail sales; Eurozone unemployment rate.
    • Wednesday: Australia GDP; China Caxin PMI services; Eurozone PMI services final, PPI; UK PMI services final; US ADP employment, ISM services, factory orders, Fed’s Beige Book report.
    • Thursday: Australia building permits, goods trade balance; Swiss unemployment rate; UK PMI construction; Eurozone retail sales, ECB rate decision, US jobless claims, trade balance; Canada Ivey PMI.
    • Friday: China trade balance; Germany factory orders; Swiss foreign currency reserves; Eurozone GDP revision; Canada employment; US non-farm payrolls.

    EUR/AUD Daily Outlook

    Daily Pivots: (S1) 1.6660; (P) 1.6717; (R1) 1.6768; More…

    Intraday bias in EUR/AUD stays on the upside for the moment. As noted before, consolidation from 1.6800 should have already completed with three waves down to 1.6355. Firm break of 1.6800 resume the rise from 1.5963 to 61.8% projection of 1.5963 to 136800 from 1.6355 at 1.6872, and then 100% projection at 1.7192, which is close to 1.7180 high. On the downside, below 1.6657 minor support will delay the bullish case and turn intraday bias neutral again first.

    In the bigger picture, with 1.5996 key support (2024 low) intact, larger up trend from 1.4281 (2022 low) is still in favor to resume through 1.7180 at a later stage. Nevertheless, sustained break of 1.5996 will indicate that such up trend has completed and deeper decline would be seen.

    D

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    21:45 NZD Terms of Trade Index Q4 3.10% 1.50% 2.40% 2.50%
    00:00 AUD TD-MI Inflation Gauge M/M Feb -0.20% 0.10%
    00:30 JPY Manufacturing PMI Feb F 49 48.9 48.9
    01:45 CNY Caixin Manufacturing PMI Feb 50.8 50.3 50.1
    08:30 CHF Manufacturing PMI Feb 48.4 47.5
    08:50 EUR France Manufacturing PMI Feb F 45.5 45.5
    08:55 EUR Germany Manufacturing PMI Feb F 46.1 46.1
    09:00 EUR Eurozone Manufacturing PMI Feb F 47.3 47.3
    09:30 GBP Manufacturing PMI Feb F 46.4 46.4
    09:30 GBP Mortgage Approvals Jan 66K 67K
    09:30 GBP M4 Money Supply M/M Jan 0.20% 0.10%
    10:00 EUR Eurozone CPI Y/Y Feb P 2.30% 2.50%
    10:00 EUR Eurozone CPI Core Y/Y Feb P 2.50% 2.70%
    14:30 CAD Manufacturing PMI Feb 51.6
    14:45 USD Manufacturing PMI Feb F 51.6 51.6
    15:00 USD ISM Manufacturing PMI Feb 50.8 50.9
    15:00 USD ISM Manufacturing Prices Paid Feb 56.2 54.9
    15:00 USD ISM Manufacturing Employment Feb 50.3
    15:00 USD Construction Spending M/M Jan -0.10% 0.50%

     



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  • Safe-Haven Demand Fuels Dollar Rally Amid Trade, Geopolitical Turmoil

    Safe-Haven Demand Fuels Dollar Rally Amid Trade, Geopolitical Turmoil


    Market sentiment took a decisive turn for the worse last week, with risk aversion dominating across asset classes. The combination of deteriorating domestic economic conditions in the US and heightened global uncertainties has fueled concerns that risk appetite could weaken further. Equities faced renewed selling pressure, yields dropped sharply.

    Domestically, US economic data painted a troubling picture. Consumer confidence deteriorated sharply, while weak personal spending data and a rise in jobless claims suggested that the labor market could be facing new headwinds. With the economy looking increasingly fragile, concerns are mounting that the economy may struggle to maintain momentum, reinforcing speculation about Fed rate cuts.

    Externally, the risk of a full-blown trade war continues to escalate. US President Donald Trump doubled down on his aggressive tariff agenda, reaffirming the March 4 deadline for 25% tariffs on Canada and Mexico and indicating that the EU would be next in line with reciprocal tariffs.

    Geopolitical tensions also worsened, particularly after a dramatic Oval Office showdown between Trump, Vice President JD Vance, and Ukrainian President Volodymyr Zelenskiy. The meeting, initially expected to pave the way for a mineral deal between the US and Ukraine—potentially a step toward resolving the Russian invasion—ended in failure. With US-Ukraine relations strained and no clear resolution in sight, uncertainty in the region remains elevated.

    On the bright side, markets have scaled up expectations for a Fed rate cut in the first half of the year. However, it’s unclear whether additional monetary easing will truly bolster risk sentiment or simply underscore the extent of the economic challenges ahead. A rate cut could offer short-term relief for risk assets, but it might also underscore fears of an impending downturn in domestic activity.

    In the forex market, Dollar emerged as the clear winner for the week, benefiting from risk aversion rather than rate expectations. Sterling and Swiss Franc followed as the next strongest currencies, with the UK seemingly avoiding US tariff threats and the Franc gaining from both risk aversion and Euro weakness. At the other end of the spectrum, commodity currencies struggled, with New Zealand Dollar leading the declines, followed by Australian and Canadian Dollars. Meanwhile, Euro ended in a mixed manner, with the initial post-German election boost fading as tariff threats weighed. Yen also struggled to extend its rally, leaving it stuck in the middle of the performance ladder.

    Investors Pin Hopes on Fed Easing as Stocks Sell Off, But Is Relief Temporary?

    US equity markets ended February on a weak note, with NASDAQ suffering a sharp -3.5% weekly decline despite a late recovery. S&P 500 also lost nearly -1%, while DOW managed to close about 1% higher, benefiting from recovery after leading the selloff earlier in the month. However, the broader market sentiment remained fragile.

    For the entire month, NASDAQ dropped -4%, marking its worst monthly performance since April 2024. S&P 500 fell -1.5%, while the DOW ended down -1.6%. Several factors weighed on market sentiment, including intensifying trade war risks, particularly as the scheduled 25% tariffs on Canada and Mexico approach on March 4. The more consequential reciprocal tariffs, set to take effect on April 2, also remain a source of significant uncertainty.

    US economic data further exacerbated concerns, with sharp decline in consumer confidence, jump in jobless claims, and contraction in personal spending, all pointing to risk of extended weakness in household demand. These indicators have fueled doubts about the strength of US consumption, which remains a critical driver of economic growth.

    With these headwinds and decline in PCE core inflation as released on Friday, expectations for another Fed rate cut in the first half of the year continued to rise. Fed fund futures now price in a 94% probability of a 25bps cut to 4.00%-4.25% in June, up significantly from 63% just a week ago. This growing optimism about resumed Fed easing has provided some support to market sentiment. But it remains unclear whether it will be enough to reverse the pre-dominating risk-off mood or merely slow the pace of decline.

    Technically, NASDAQ is tentatively drawing support from 38.2% retracement of 15708.53 to 20204.58 at 18487.09. Strong rebound from current level, followed by firm break of 55 D EMA (now at 19440.85) will suggest that the corrective pattern from 20204.58 has completed. That will also keep the medium term up trend intact for another rally through 20204.58 at a later stage.

    However, sustained break of 18487.09 will raise the chance that a larger scale correction has already started. In the bearish case, NASDAQ should be correcting whole uptrend from 10088.82 (2022 low). Further break of 55 W EMA (now at 17866.91) will confirm this bearish case and pave the way to 38.2% retracement of 10088.82 to 20204.58 at 16340.36.

    Risk Aversion Drags Yields Down, But Lifts Dollar Higher

    Risk aversion was also evident in the US bond markets, with 10-year Treasury yield tumbling sharply to its lowest level since December. The sharp drop highlights growing concerns over economic uncertainty and trade tensions.

    Technically, current development suggests that rise from 3.603 (2024 low) has completed at 4.809 already, well ahead of 4.997 (2023 high). Current fall is seen as another downleg in the sideway corrective pattern from 4.997. Deeper decline is expected to 61.8% retracement of 3.603 to 4.809 at 4.063 next. Risk will stay on the downside as long as 55 D EMA (now at 4.452) holds, in case of recovery.

    Dollar Index clear reacted more to risk aversion than falling yields and Fed cut expectations. The’s strong bounce towards the end of the week and the break of 55 D EMA (now at 107.31) suggests that fall from 110.17 has completed at 106.12. That came after defending 38.2% retracement of 100.15 to 110.17 at 106.34. Further rise should be seen to 108.52 resistance. Firm break there will target a retest on 110.17 high.

    In the bigger picture, Dollar Index is holding comfortably above 55 W EMA (now at 105.37), and thus rise from 100.15 and 99.57 should still be intact. Break of 110.17 will pave the way back to 114.77 (2022 high) at a later stage.

    NZD/USD and AUD/USD Sink, Eye 2025 Lows for Support

    Kiwi and Aussie were the worst-performing currencies last week, each losing around -2.4% against the greenback. With risk sentiment deteriorating downside pressure on these two currencies could persistent. The key focus now is whether risk aversion would intensify and push NZD/USD and AUD/USD through this year’s lows to resume the long term down trend. There these key support levels could offer a breather to them.

    Technically, NZD/USD’s steep decline last week suggests that corrective rebound from 0.5515 should have completed at 0.5571 already. Retest of 0.5515 should be seen next. Strong support from there could bring rebound to extend the corrective pattern with another rising leg. But outlook will stay bearish as long as 38.2% retracement of 0.6378 to 0.5515 at 0.5848 holds. Firm break of 0.5515 will resume the long term down trend to 61.8% projection of 0.7463 to 0.5511 from 0.6378 at 0.5172.

    Similarly, AUD/USD’s corrective rebound from 0.6087 should have completed at 0.6407. Retest of 0.6087 low should be seen next. Strong rebound from there would extend the corrective pattern with another rising leg. But outlook will stay bearish as long as 38.2% retracement of 0.6941 to 0.6087 at 0.6413 holds. Firm break of 0.6087 will resume the long term down trend to 61.8% projection of 0.8006 to 0.6169 from 0.6941 at 0.5806.

    Bitcoin and Gold Tumble on Risk-Off Sentiment

    Bitcoin and Gold struggled under renewed risk aversion last week, extending their losses in line with broader market weakness. While Gold retains a comparatively better outlook, both assets remain vulnerable to ongoing volatility.

    Bitcoin suffered a sharp fall, decisively breaking 89127 support, confirming medium-term topping at 109571. The current slide is seen as a correction of the entire uptrend from the 15452 (2022 low). Deeper decline toward 55 W EMA (now at 74129) is expected.

    Strong support could emerge from the 73812 cluster zone (38.2% retracement of 15452 to 109571 at 73617) to bring rebound, at least first attempt. However, downside risks remain as long as 55 D EMA (now at 95288) caps any recovery.

    Decisive break of 73617/73812 zone could extended the decline to 50k mark, which is close to 49008 support and 61.8% retracement at 51405.

    By contrast, Gold’s outlook is less overtly bearish. 2956.09 is seen as a short term top only, for now. Subsequent pullback is viewed primarily as a correction of the rise from 2584.24. Strong support might be seen from 55 D EMA (now at 2792.05) to bring rebound, and set the base for uptrend resumption at a later stage.

    However, considering that Gold was just rejected by 3000 psychological level sustained trading below 55 D EMA would argue that larger scale correction in underway. In the bearish case, Gold could be starting a medium term decline back to 55 W EMA (now at 2522.33).

    EUR/USD Weekly Outlook

    EUR/USD reversed after edging higher to 1.0527 last week, and the development suggests that consolidation from from 1.0176 has already completed. Initial bias stays on the downside this week for retesting 1.0176/0210 support zone first. Firm break there will resume whole fall from 1.1213, and carry larger bearish implications. On the upside, above 1.0419 minor resistance will turn intraday bias neutral. But outlook will stay bearish as long as 38.2% retracement of 1.1213 to 1.0176 at 1.0572 holds.

    In the bigger picture, immediate focus is on 61.8 retracement of 0.9534 (2022 low) to 1.1274 (2024 high) at 1.0199. Sustained break there will solidify the case of medium term bearish trend reversal, and pave the way back to 0.9534. However, reversal from 1.0199 will argue that price actions from 1.1274 are merely a corrective pattern, and has already completed.

    In the long term picture, down trend from 1.6039 remains in force with EUR/USD staying well inside falling channel, and upside of rebound capped by 55 M EMA (now at 1.0929). Consolidation from 0.9534 could extend further and another rising leg might be seem. But as long as 1.1274 resistance holds, eventual downside breakout would be mildly in favor.



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  • Markets Reel Under Trade War Fears, Dollar Gains Traction, Gold Falls

    Markets Reel Under Trade War Fears, Dollar Gains Traction, Gold Falls


    Global stock markets are under heavy selling pressure as risk-off sentiment dominates the final trading day of February. The selloff intensified across major indices, with Japan’s Nikkei plunging -3% and Hong Kong’s Hang Seng Index down -2.8%, following the steep declines in US equities overnight. Investors are increasingly wary of escalating trade tensions, which could further weigh on the fragile global recovery.

    Market sentiment took a sharp hit after confirmation that the 25% US tariffs on Mexico and Canada will take effect on March 4. The more consequential reciprocal tariffs, set for April 2, have also drawn attention, particularly with US President Donald Trump threatening to extend a 25% tariff on European Union imports.

    NASDAQ was the hardest hit among US indices, tumbling -2.78%, with semiconductor giant Nvidia leading the declines with an -8.5% drop. Despite reporting strong quarterly earnings, the company is facing increased concerns that it won’t be immune to the broader trade war, particularly if Taiwan’s chip industry comes under new US tariff measures. Given Nvidia’s dominant role in the AI sector, any disruption in its supply chain could ripple through the entire tech sector.

    In the currency markets, Dollar is now firmly leading the weekly performance rankings after its sharp rally overnight. Swiss Franc follows as the second-strongest, while Sterling also benefits from the broader selloff in Euro. Meanwhile, commodity-linked currencies are bearing the brunt of risk aversion, with New Zealand Dollar plunging the most, followed by Australian and Canadian Dollars. While Euro and Yen are positioned in the middle of the performance spectrum, the single currency is looking rather vulnerable.

    Technically, Gold’s extended decline is another confirmation of the Dollar’s underlying strength. The break of 2876.93 support confirms short-term topping at 2956.09, just below the key psychological 3000 level, with bearish divergence in 4H MACD.

    Deeper correction should be seen to 38.2% retracement of 2584.24 to 2956.09 at 2814.04. Rebound from there indicate that it’s just a near term correction, and keep the larger up trend intact. However, sustained break of 2814.04 will suggest that a larger scale correction is already unfolding.

    In Asia, at the time of writing, Nikkei is down -2.97%. Hong Kong HSI is down -2.58%. China Shanghai SSE is down -1.11%. Singapore Strait Times is down -0.72%. Japan 10-year JGB yield is down -0.023 at 1.373. Overnight, DOW fell -0.45%. S&P 500 fell -1.59%. NASDAQ fell -2.78%. 10-year yield rose 0.036 to 4.285.

    BoJ’s Uchida: Yield rise reflects market’s views on economic and global developments

    Speaking in parliament today, BoJ Deputy Governor Shinichi Uchida said recent rise in JGB yields “reflects the market’s view on the economic and price outlook, as well as overseas developments.”

    “There’s no change to our stance on short-term policy rates and government bond operations,” he emphasized, adding that the bond holdings “continue to exert a strong monetary easing effect” on the economy.

    When asked whether the prospect of further rate hikes and tapering would continue to drive yields higher, Uchida responded that it is ultimately “up to markets to decide.”

    Japan’s Tokyo CPI slows to 2.2% yoy in Feb, industrial production down -1.1% mom in Jan

    Tokyo’s core CPI (ex-food) slowed to 2.2% yoy in February, down from 2.5% yoy and below market expectations of 2.3% yoy. This marks the first decline in four months, largely due to the reintroduction of energy subsidies. Meanwhile, core-core CPI (ex-food and energy) held steady at 1.9% yoy. Headline CPI slowed from 3.4% yoy to 2.9% yoy.

    In the industrial sector, production contracted by -1.1% mom in January, a sharper decline than the expected -0.9%. Manufacturers surveyed by Japan’s Ministry of Economy, Trade, and Industry anticipate a strong 5.0% mom rebound in February, followed by a -2.0% mom drop in March.

    On the consumer front, retail sales grew 3.9% yoy in January, slightly missing the 4.0% yoy forecast, but still pointing to resilient domestic demand.

    Fed’s Hammack signals cautious approach, stresses policy patience

    Cleveland Fed President Beth Hammack said Fed has the “luxury of being patient” given the strength of the labor market and the uneven progress in reducing inflation.

    In a speech overnight, she noted that while inflation has moderated, it remains above the 2% target, and policymakers are not yet confident that price pressures will fully subside. As a result, she expects the federal funds rate to stay steady “for some time”.

    Hammack acknowledged that the current policy stance has helped ease inflation, but she warned that risks remain. While Fed anticipates a gradual return to 2% inflation over the medium term, she stressed that this is “far from a certainty.”

    She suggested Fed will need to take a “patient approach” in monitoring how inflation and the labor market adjust before making any policy changes.

    Fed’s Harker says one inflation report shouldn’t sway policy in either direction

    Philadelphia Fed President Patrick Harker noted in a speech overnight that recent inflation data continues to show an uneven path toward the 2% target. He acknowledged that January’s consumer price data came in hotter than expected, marking the fastest increase in 18 months.

    However, he stressed that policymakers should “not be moved to act, in either direction” based on a single month’s data.

    Harker reaffirmed his stance that the Fed’s current policy rate remains sufficiently restrictive to keep inflation in check without undermining overall economic stability.

    Despite inflation’s persistence, Harker remains optimistic about the economic outlook. He stated, “I am of a position that we let monetary policy continue to work.”

    Looking ahead

    Germany will release CPI flash, import prices, retail sales and unemployment in European session. Swiss will release KOF economic barometer.

    Later in the day, Canada will publish GDP. Focus is also on US PCE inflation, goods trade balance and Chicago PMI.

    AUD/USD Daily Report

    Daily Pivots: (S1) 0.6207; (P) 0.6261; (R1) 0.6291; More…

    AUD/USD’s fall from 0.6407 accelerated lower today and intraday bias stays on the downside for retesting 0.6087 low. Decisive break there will resume larger decline from 0.6941. On the upside, above 0.6284 minor resistance will turn intraday bias neutral first. But outlook will remain bearish as long as 38.2% retracement of 0.6941 to 0.6087 at 0.6413 holds, in case of recovery.

    In the bigger picture, fall from 0.6941 (2024 high) is seen as part of the down trend from 0.8006 (2021 high). Next medium term target is 61.8% projection of 0.8006 to 0.6169 from 0.6941 at 0.5806. In any case, outlook will stay bearish as long as 55 W EMA (now at 0.6505) holds.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    23:30 JPY Tokyo CPI Y/Y Feb 2.90% 3.40%
    23:30 JPY Tokyo CPI Core Y/Y Feb 2.20% 2.30% 2.50%
    23:30 JPY Tokyo CPI Core-Core Y/Y Feb 1.90% 1.90%
    23:50 JPY Industrial Production M/M Jan P -1.10% -0.90% -0.20%
    23:50 JPY Retail Trade Y/Y Jan 3.90% 4.00% 3.70% 3.50%
    00:30 AUD Private Sector Credit M/M Jan 0.50% 0.60% 0.60%
    05:00 JPY Housing Starts Y/Y Jan -2.60% -2.50%
    07:00 EUR Germany Import Price Index M/M Jan 0.70% 0.40%
    07:00 EUR Germany Retail Sales M/M Jan 0.10% -1.60%
    07:45 EUR France Consumer Spending M/M Jan -0.80% 0.70%
    07:45 EUR France GDP Q/Q Q4 -0.10% -0.10%
    08:00 CHF KOF Economic Barometer Feb 102.1 101.6
    08:55 EUR Germany Unemployment Change Jan 15K 11K
    08:55 EUR Germany Unemployment Rate Jan 6.20% 6.20%
    13:00 EUR Germany CPI M/M Feb P 0.40% -0.20%
    13:00 EUR Germany CPI Y/Y Feb P 2.30% 2.30%
    13:30 CAD GDP M/M Dec 0.30% -0.20%
    13:30 USD Personal Income M/M Jan 0.30% 0.40%
    13:30 USD Personal Spending Jan 0.20% 0.70%
    13:30 USD PCE Price Index M/M Jan 0.30% 0.30%
    13:30 USD PCE Price Index Y/Y Jan 2.50% 2.60%
    13:30 USD Core PCE Price Index M/M Jan 0.30% 0.20%
    13:30 USD Core PCE Price Index Y/Y Jan 2.60% 2.80%
    13:30 USD Goods Trade Balance (USD) Jan P -114.9B -122.0B
    13:30 USD Wholesale Inventories Jan P 0.10% -0.50%
    14:45 USD Chicago PMI Feb 40.3 39.5

     



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  • Dollar Attempts Another Comeback, Aussie Lags

    Dollar Attempts Another Comeback, Aussie Lags


    Dollar traded broadly higher in Asian session, trying to stage a comeback after a failed rally attempt overnight. Renewed focus on tariffs appears to be driving some of the greenback’s momentum. Meanwhile, broader market sentiment is just steady following Nvidia’s strong earnings report, with lingering concerns over competition from China’s DeepSeek AI continue to weigh.

    Tariffs are back in headlines after US Commerce Secretary Howard Lutnick revealed that the “big transaction” involving reciprocal tariffs is set for April 2. The date was pushed from April 1, as US President Donald Trump—citing superstition—chose to avoid making major policy moves on that day.

    Lutnick also noted that Canada and Mexico could avoid the planned 25% tariffs if they can demonstrate sufficient progress on border security and fentanyl control. However, he added that Trump would ultimately decide whether to pause again or proceed with the tariffs.

    Despite Nvidia reporting an impressive 78% year-over-year sales increase and a 93% jump in data center revenue, its struggle to rebound with momentum. The company has yet to fully recover from its 17% drop on January 27—its worst single-day decline since 2020—amid growing concerns about China’s emerging AI competitor, DeepSeek.

    Elsewhere, Aussie is struggling despite comments from a top RBA official suggesting that rate cuts are not on auto-pilot and that further easing would require more disinflation evidence. This cautious stance should have provided some support for the Aussie, but broader risk-off sentiment is keeping the currency under pressure.

    For now, Aussie is sitting at the bottom of today’s performance chart. Kiwi is also underperforming, while Swiss Franc is the third worst performer of the day so far. At the top of the performance table, Dollar leads, followed by Yen and Loonie. Euro and British Pound are positioning in the middle.

    Technically, AUD/JPY’s fall from 102.39 resumed this week and further fall should now be seen to 100% projection of 102.39 to 95.50 from 98.75 at 91.86. As this decline is seen as the second leg of the corrective pattern from 90.10, strong support should be seen around there to bring reversal. But risk will continue to stays on the downside as long as 55 D EMA (now at 96.74) holds, in case of recovery.

    In Asia, at the time of writing, Nikkei is up 0.14%. Hong Kong HSI is down -0.76%. China Shanghai SSE is down -0.49%. Singapore Strait Times is down -0.13%. Japan 10-year JGB yield is up 0.036 at 1.402. Overnight, DOW fell -0.43%. S&P 500 rose 0.01%. NASDAQ rose 0.26%. 10-year yield fell -0.049 to 4.249.

    RBA’s Hauser: Global uncertainty justifies rate cut, but more easing depends on disnflation evidence

    RBA Deputy Governor Andrew Hauser told the parliament today that mounting global uncertainty had a chilling effect on economic activity, which played a role in the board’s decision to cut the cash rate by 25 bps this month.

    He noted that businesses are becoming increasingly cautious, delaying investment projects and expansion plans as they wait for clearer economic signals, “just to see how things pan out.”

    This hesitation, he suggested, made a slight easing of monetary policy a “sensible” response to support economic stability.

    However, Hauser emphasized that further rate cuts are not guaranteed and will depend on incoming inflation data. Policymakers remain optimistic about further disinflation but need to see clear evidence before committing to additional policy easing.

    NZ ANZ business confidence rises to 58.4, on the path to recovery

    New Zealand’s ANZ Business Confidence rose from 54.4 to 58.4 in February. However, the Own Activity Outlook, slipped slightly from 45.8 to 45.1, highlighting that while sentiment is improving, actual activity remains uncertain.

    Pricing and cost indicators painted a mixed picture. Inflation expectations for the next year eased from 2.67% to 2.53% and cost expectations fell from 73.6 to 71.3. But wage expectations remained elevated at 79.2 despite fall from 83.1, and pricing intentions ticked up from 45.7 to 46.2.

    ANZ noted that the economy is on the “path to recovery,” supported by lower interest rates and stronger-than-expected commodity export prices. However, the bank cautioned that the next phase of growth remains “a point of debate.”

    The pace of expansion will depend on how households perceive current interest rates, the extent to which global uncertainty influences business investment, and whether firms push forward despite challenges. Additionally, potential labor shortages could emerge as a key constraint on further growth.

    BoE’s Dhingra: Orderly trade fragmentation unlikely to require monetary policy response

    BoE MPC member Swati Dhingra suggested that the inflationary impact of rising global tariffs could be tempered by weaker economic growth.

    She added that if the global economy undergoes a “fragmentation in an orderly way,” monetary policy might not need to react immediately as prices readjust to new geopolitical shifts.

    However, she cautioned that in an “extreme scenario” where multiple major economies erect significant trade barriers similar to those proposed by the US, “severe strain on a few sources of supply” could lead to sharp price spikes, reminiscent of those seen following Russia’s 2022 invasion of Ukraine.

    Despite the risks, Dhingra downplayed the likelihood of a severe disruption, noting that “the world economy seems to be moving closer to an orderly fragmentation.”

    Looking ahead

    Swiss GDP, Eurozone M3 monthly supply will be released in European session. ECB will publish meeting accounts.

    Later in the day, US will release GDP revision, durable goods orders and pending home sales.

    USD/CHF Daily Outlook

    Daily Pivots: (S1) 0.8920; (P) 0.8943; (R1) 0.8969; More…

    USD/CHF recovered notably but stays below 0.9053 resistance and intraday bias remains neutral. The corrective pattern from 0.9200 could still extend lower. But strong support should be seen from 38.2% retracement of 0.8374 to 0.9200 at 0.8884 to complete it, and bring larger rise resumption. On the upside, above 0.9053 will bring retest of 0.9200 resistance. However, sustained break of 0.8884 will indicate bearish reversal, and target 61.8% retracement at 0.8690 instead.

    In the bigger picture, decisive break of 0.9223 resistance will argue that whole down trend from 1.0342 (2017 high) has completed with three waves down to 0.8332 (2023 low). Outlook will be turned bullish for 1.0146 resistance next. Nevertheless, rejection by 0.9223 will retain medium term bearishness for another decline through 0.8332 at a later stage.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    00:00 NZD ANZ Business Confidence Feb 58.4 54.4
    00:30 AUD Private Capital Expenditure Q4 -0.20% 0.60% 1.10% 1.60%
    08:00 CHF GDP Q/Q Q4 0.20% 0.40%
    09:00 EUR Eurozone M3 Money Supply Y/Y Jan 3.80% 3.50%
    10:00 EUR Eurozone Economic Sentiment Feb 96 95.2
    10:00 EUR Eurozone Industrial Confidence Feb -12 -12.9
    10:00 EUR Eurozone Services Sentiment Feb 6.8 6.6
    10:00 EUR Eurozone Consumer Confidence Feb F -13.6 -13.6
    12:30 EUR ECB Meeting Accounts
    13:30 CAD Current Account (CAD) Q4 -3.2B -3.2B
    13:30 USD Initial Jobless Claims (Feb 21) 220K 219K
    13:30 USD GDP Annualized Q4 P 2.30% 2.30%
    13:30 USD GDP Price Index Q4 P 2.20% 2.20%
    13:30 USD Durable Goods Orders Jan 2.00% -2.20%
    13:30 USD Durable Goods Orders ex Transport Jan 0.40% 0.30%
    15:00 USD Pending Home Sales M/M Jan -1.30% -5.50%
    15:30 USD Natural Gas Storage -276B -196B

     



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  • Dollar Gathers Momentum, Gold Cools Off, Market Jitters Ahead?

    Dollar Gathers Momentum, Gold Cools Off, Market Jitters Ahead?


    Dollar appears to be gathering steam for a stronger, sustainable near-term rebound, although the precise catalyst remains unclear. One contributing factor an undercurrent of risk aversion, which is reflected in the broad selloff in the Australian and New Zealand Dollars. Yet, the overall market picture is mixed, as US stock futures inch higher and Treasury yields hold steady, hardly signaling a deep risk-off move or robust safe-haven flows.

    Another explanation points to traders positioning ahead of Nvidia’s earnings release, due after the bell. With the AI-driven rally serving as a key theme for tech stocks, any surprise in the results could influence wider market sentiment, thereby affecting the currency markets. Additionally, speculation is building around the upcoming March 4 tariff deadline, when US levies on Canada and Mexico—postponed for a month to address border and fentanyl issues—are set to take effect.

    At present, the greenback tops the leaderboard for the day, followed by Sterling and Loonie. Aussie and Kiwi lag, with Swiss Franc also underperforming. Euro and Yen are holding middle ground.

    Technically, considering bearish divergence condition in 4H MACD, a short term top could already be in place in Gold at 2956.09, ahead of 3000 psychological level. Firm break of 2876.93 support should confirm this case, and bring deeper correction to 38.2% retracement of 2584.24 to 2956.09 at 2814.04. If realized, that would be a confirmation for Dollar’s rebound.

    In Europe, at the time of writing, FTSE is up 0.65%. DAX is up 1.69%. CAC is up 1.32%. UK 10-year yield is down -0.0316 at 4.483. Germany 10-year yield is down -0.032 at 2.429. Earlier in Asia, Nikkei fell -0.25%. Hong Kong HSI rose 3.27%. China Shanghai SSE rose 1.02%. Singapore Strait Times fell -0.20%. Japan 10-year JGB yield fell -0.0098 to 1.367.

    German Gfk consumer sentiment drops to -24.7, no sign of recovery yet

    Germany’s GfK Consumer Sentiment Index for March declined further from -22.6 to -24.7, missing expectations of -21.1.

    February data showed income expectations plunging -4.3 points to -5.4, marking a 13-month low, while the economic outlook for the next 12 months improved slightly by 2.8 points to 1.2.

    According to Rolf Bürkl, consumer expert at NIM, the data highlights that “no signs of a recovery” are visible in German consumer sentiment. He noted that headline index has been stuck at a low level since mid-2024, with “great deal of uncertainty among consumers and a lack of planning security”.

    Australia’s monthly CPI holds at 2.5%, core measures edge higher

    Australia’s monthly CPI was unchanged at 2.5% yoy in January, falling short of expectations for a slight uptick to 2.6%.

    However, underlying inflation pressures showed signs of persistence, with CPI excluding volatile items and holiday travel rising from 2.7% yoy to 2.9% yoy. Trimmed mean CPI edged up from 2.7% yoy to 2.8% yoy.

    These figures suggest that while headline inflation appears stable, core price pressures are still lingering, reinforcing RBA’s cautious stance on further easing.

    The largest contributors to annual inflation included food and non-alcoholic beverages (+3.3% yoy), housing (+2.1% yoy), and alcohol and tobacco (+6.4% yoy).This was partly offset by a notable decline in electricity prices, which fell -11.5% yoy.

    AUD/USD Mid-Day Report

    Daily Pivots: (S1) 0.6325; (P) 0.6341; (R1) 0.6360; More…

    AUD/USD’s break of 0.6327 support should confirm short term topping at 0.6407, on bearish divergence condition in 4H MACD. Corrective rebound should have completed just ahead of 38.2% retracement of 0.6941 to 0.6087 at 0.6413. Intraday bias is back on the downside for retesting 0.6087 low. For now, risk will stay on the downside as long as 0.6407 holds, in case of recovery.

    In the bigger picture, fall from 0.6941 (2024 high) is seen as part of the down trend from 0.8006 (2021 high). Next medium term target is 61.8% projection of 0.8006 to 0.6169 from 0.6941 at 0.5806. In any case, outlook will stay bearish as long as 55 W EMA (now at 0.6505) holds.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    00:30 AUD Monthly CPI Y/Y Jan 2.50% 2.60% 2.50%
    00:30 AUD Construction Work Done Q4 0.50% 0.80% 1.60% 2.00%
    07:00 EUR Germany GfK Consumer Sentiment Mar -24.7 -21.1 -22.4 -22.6
    09:00 CHF UBS Economic Expectations Feb 3.4 17.7
    15:00 USD New Home Sales Jan 677K 698K
    15:30 USD Crude Oil Inventories 2.5M 4.6M

     



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  • Greenback Drops Ahead of Consumer Data, Risk Sentiment in Focus

    Greenback Drops Ahead of Consumer Data, Risk Sentiment in Focus


    Dollar weakened notably against European majors and Yen as markets transitioned into US session, despite subdued overall trading activity. The decline was largely driven by extended fall in US 10-year Treasury yield, which hit its lowest level since mid-December.

    Beyond geopolitical and trade war concerns, market focus has turned toward whether slowing US consumption and softer economic data could force Fed to resume rate cuts sooner than expected, even as inflation remains elevated. Fed funds futures now price in a near 65% chance of a 25bps rate cut in June, a notable increase from 45% just a week ago.

    The next catalyst for Dollar’s direction will be consumer confidence report, set for release shortly. However, Dollar’s next moves may not be straightforward, as risk aversion—if it intensifies—could provide some support due to safe-haven demand. US stocks, particularly the tech-heavy NASDAQ, could be vulnerable on the upcoming Nvidia earnings report later in the week.

    For now, commodity currencies are under the most pressure, with Kiwi leading the declines. On the other hand, Swiss Franc is the strongest performer, followed closely by Sterling and Euro. Dollar and Yen are positioned in the middle.

    Looking ahead to the Asian session, Australia’s monthly CPI reading will draw attention. Consensus suggests inflation might edge up from 2.5% to 2.6% in January, supporting RBA’s cautious stance even after it initiated its easing cycle earlier this month. Still, a downside surprise would provide RBA with added confidence to proceed with additional rate cuts if economic conditions worsen.

    Technically, EUR/AUD’s rebound is gaining some momentum today. Firm break of 1.6631 resistance will argue that the corrective pattern from 1.6800 has completed, and larger rise from 01.5963 is finally ready to resume through 1.6800.

    In Europe, at the time of writing, FTSE is up 0.47%. DAX is up 0.43%. CAC is up 0.04%. UK 10-year yield is down -0.0475 at 4.525. Germany 10-year yield is down -0.0012 at 2.479. Earlier in Asia, Nikkei fell -1.39%. Hong Kong HSI fell -1.32%. China Shanghai SSE fell -0.80%. Singapore Strait Times fell -0.30%. Japan 10-year JGB yield fell -0.0511 to 1.376.

    ECB’s Nagel expects more rate cuts Amid encouraging price trends

    German ECB Governing Council member Joachim Nagel indicated that incoming data suggests the central bank is on track to achieve its inflation target this year, opening the door for further rate cuts.

    Speaking today, Nagel stated, “This would allow us on the Governing Council to lower the key interest rates further,” reinforcing expectations that ECB will continue its gradual easing cycle.

    However, Nagel also cautioned against premature optimism, highlighting “persistently elevated core inflation and the undiminished strength of services inflation.”

    Bitcoin breaches 90K, double top breakdown could trigger deep correction

    Bitcoin’s selloff intensified today, plunging below the 90k mark and hitting its lowest level since November. The immediate catalyst appears to be last week’s massive hack of USD 1.5B worth of Ether from cryptoexchange Bybit—an incident researchers have labeled the biggest crypto heist on record.

    Although Bybit has announced that it fully restored the stolen Ether, market sentiment remains firmly negative, as traders grow wary of systemic risks and question the exchange’s ability to prevent future breaches.

    Technically, Bitcoin now hovers at a critical juncture. The key 89,127 support level is under heavy pressure, and decisive break there would complete a double top pattern (108368, 108571). Such a development would strongly indicate that a larger-scale correction is underway.

    In the bearish scenario, Bitcoin could be entering a correction of the entire rally from 15,452 (2022 low). The correction could target 73,812 cluster support (38.2% retracement of 15,452 to 109,571 at 73,617) before completion.

    GBP/USD Mid-Day Outlook

    Daily Pivots: (S1) 1.2594; (P) 1.2643; (R1) 1.2673; More…

    Intraday bias in GBP/USD stays neutral at this point. Further rise will remain in favor as long as 1.2522 resistance turned support holds. Above 1.2689 will resume the rally from 1.2099 to 1.2810 resistance next. However, firm break below 1.2522 will argue that the rebound might have completed, and bring deeper fall to 1.2331 support.

    In the bigger picture, rise from 1.0351 (2022 low) should have already completed at 1.3433 (2024 high), and the trend has reversed. Further fall is now expected as long as 1.2810 resistance holds. Deeper decline should be seen to 61.8% retracement of 1.0351 to 1.3433 at 1.1528, even as a corrective move. However, firm break of 1.2810 will dampen this bearish view and bring retest of 1.3433 high instead.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    23:50 JPY Corporate Service Price Index Y/Y Jan 3.10% 2.90% 2.90% 3.00%
    07:00 EUR Germany GDP Q/Q Q4 F -0.20% -0.20% -0.20%
    14:00 USD S&P/CS Composite-20 HPI Y/Y Dec 4.30% 4.30%
    14:00 USD Housing Price Index M/M Dec 0.20% 0.30%
    15:00 USD Consumer Confidence Feb 103.3 104.1

     



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  • Dollar Rises Slightly After Trump Reaffirms March 4 Tariff Plans for Mexico and Canada

    Dollar Rises Slightly After Trump Reaffirms March 4 Tariff Plans for Mexico and Canada


    Dollar gained slightly overnight, buoyed by mild risk aversion and ongoing tariff threats from President Donald Trump. However, the lack of follow-through momentum in the greenback suggests traders remain hesitant to commit to large directional bets amid persistent policy uncertainty.

    US stock market weakness has been most pronounced in the NASDAQ, which fell by more than -1%. Some of this pullback appears related to profit taking ahead of Nvidia’s quarterly results, due on Wednesday. There are concerned about lower demand for AI technology if China’s low-cost DeepSeek gains traction, posing competition to the industry’s current frontrunners.

    Adding to the cautious tone, Trump doubled down on his plan to impose 25% tariffs on Mexico and Canada, stating the levies are “on time, on schedule” for March 4, following a one-month delay. However, markets have been reluctant to react too strongly, given Trump’s history of sudden policy reversals, which adds to the uncertainty surrounding trade relations.

    In currency markets, Euro is currently the strongest performer for the week, followed by Swiss Franc and then Dollar. Meanwhile, Loonie is the worst so far, trailed by Yen and Kiwi. Aussie and Sterling are trading in the middle of the pack. Looking ahead, US consumer confidence data could provide the next directional cue for the market.

    USD/CAD stands out as a pair to watch, especially under the looming tariff threat. Technically, the fall from 1.4791 (considered a correction to the rally from 1.3418) is in favor to continue as long as 1.4378 resistance holds. Break below 1.4150 would open the way to 1.3946 cluster support ( 61.8% retracement of 1.3418 to 1.4791 at 1.3942).

    However, firm break above 1.4378 would suggest the pullback has ended, paving the way for a stronger rebound to retest 1.4791 high.

    In Asia, at the time of writing, Nikkei is down -1.34%. Hong Kong HSI is down -0.62%. China Shanghai SSE is down -0.14%. Singapore Strait Times is down -0.11%. Overnight, DOW rose 0.08%. S&P 500 fell -0.50%. NASDAQ fell -1.21%. 10-year yield fell -0.027 to 4.393.

    Fed’s Goolsbee: Rate cuts on hold until policy uncertainty clears

    Chicago Fed President Austan Goolsbee emphasized the need for caution before resuming rate cuts, citing uncertainty over the economic impact of the Trump administration’s policies.

    Speaking in a TV interview overnight, Goolsbee stated that Fed remains in “wait-and-see” mode as it assesses the effects of new tariffs, immigration policies, tax cuts, government spending reductions, and federal workforce changes.

    Goolsbee made it clear that if the administration’s policies push inflation higher, Fed is obligated by law to respond accordingly. However, he stressed that the overall policy package remains unclear, making it difficult for Fed to determine its next steps.

    “There’s a lot of uncertainty, a lot of kind of dust in the air, and before the Fed can go back to cutting the rates, I feel and have expressed that we got to get a little dust out of the air,” he said.

    BoE’s Dhingra reaffirms dovish stance, signals concern over weak consumption

    BoE MPC member Swati Dhingra, one of the most dovish voices on the committee, reinforced her call for faster rate cuts. She argued that policy remains overly restrictive despite ongoing disinflation.

    Dhingra, who voted for a 50bps rate cut earlier this month, pushed back against the common interpretation that gradual easing cycle means 25bps cuts per quarter, stating that “that’s not actually what the committee has said. That’s not my definition, clearly.” She emphasized that even under the assumption of quarterly 25bps cuts, monetary policy would still be “in restrictive territory all of this year”.

    Her primary concern remains the persistent weakness in consumer spending, stating that “consumption remains pretty weak, so we’re not seeing that resurgence of inflationary pressures.” She also noted that the slow recovery in demand justifies a more accommodative stance, as “we basically aren’t recovering fully.”

    Despite concerns about potential inflationary pressures in certain items, Dhingra maintained that the disinflation process remains intact. She believes the key takeaway is that monetary policy is still restrictive, and reducing the level of restraint would not necessarily derail inflation’s downward trend.

    Her remarks highlight a clear divide within the MPC, where some members advocate patience, while doves like Dhingra and Catherine Mann argue that rate cuts should come sooner and in larger increments.

    Looking ahead

    Germany GDP final will be released in European session. Later in the day, US consumer confidence will be the main focus, and house price index will be published too.

    AUD/USD Daily Report

    Daily Pivots: (S1) 0.6331; (P) 0.6362; (R1) 0.6379; More…

    AUD/USD is staying in tight range above 0.6327 support and intraday bias stays neutral. On the downside, firm break of 0.6327 will suggest that the corrective rebound from 0.6087 has completed ahead of 38.2% retracement of 0.6941 to 0.6087 at 0.6413. Intraday bias will be turned back to the downside for retesting 0.6087 low. Nevertheless, sustained break of 0.6413 will pave the way back to 61.8% retracement at 0.6615, even still as a correction.

    In the bigger picture, fall from 0.6941 (2024 high) is seen as part of the down trend from 0.8006 (2021 high). Next medium term target is 61.8% projection of 0.8006 to 0.6169 from 0.6941 at 0.5806. In any case, outlook will stay bearish as long as 55 W EMA (now at 0.6505) holds.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    23:50 JPY Corporate Service Price Index Y/Y Jan 3.10% 2.90% 2.90% 3.00%
    07:00 EUR Germany GDP Q/Q Q4 F -0.20% -0.20%
    14:00 USD S&P/CS Composite-20 HPI Y/Y Dec 4.30% 4.30%
    14:00 USD Housing Price Index M/M Dec 0.20% 0.30%
    15:00 USD Consumer Confidence Feb 103.3 104.1

     



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  • Euro Fades After Brief German Election Boost

    Euro Fades After Brief German Election Boost


    Euro’s brief post-election rally faded quickly, as investors welcomed CDU/CSU’s victory but remained cautious due to lingering uncertainties around coalition formation and fiscal policy. While a relatively centrist government comprising CDU and the Social Democrats would provide stability, challenges surrounding the “debt brake” reform and defense spending continue to cloud the outlook.

    A coalition with the Greens and Social Democrats would likely be the most market-friendly outcome. However, even with these three parties combined, they fall short of the two-thirds parliamentary majority needed to reform the “debt brake”, which limits Germany’s structural budget deficit to 0.35% of GDP. Meanwhile, far-right AfD remains excluded from coalition talks, as Friedrich Merz has ruled out working with them.

    This situation presents a fiscal dilemma for Germany, particularly given geopolitical uncertainties. The government faces pressure to increase both defense spending and broader fiscal stimulus, but policy divisions persist. The Left Party favors loosening the debt brake, but only for social and economic spending, not for increased defense expenditure. These divisions could complicate budget negotiations and delay much-needed investment decisions.

    Bundesbank weighed in on the debate today, backing an increase in the government’s deficit cap, citing the need for higher public investment while Germany’s debt ratio remains low. In its monthly report, the Bundesbank argued that adapting the debt brake’s borrowing limit to current economic conditions is justified, but also stressed the importance of reviewing fiscal priorities and ensuring efficient use of financial resources.

    In the currency markets, trading remains subdued, with major pairs and crosses confined within Friday’s ranges. Canadian, Australian, and New Zealand dollars are the strongest performers, while Yen is the weakest, followed by Swiss Franc and British Pound. Euro and Dollar are mixed in the middle.

    Technically, a major focus is whether the risk market selloff last week would extend today, and its impact in the forex markets. As for AUD/USD, firm break of 0.6327 support will suggest that corrective rebound from 0.6087 has completed ahead of 38.2% retracement of 0.6941 to 0.6087 at 0.6413. Deeper decline would then be seen back to retest 0.6087, with prospects of resuming the whole fall from 0.6941.

    In Europe, at the time of writing, FTSE is down -0.01%/ DAX is up 0.85%. CAC is down -0.22%. UK 10-year yield is up 0.0207 at 4.597. Germany 10-year yield is up 0.020 at 2.493. Earlier in Asia, Japan was on holiday. Hong Kong HSI fell -0.58%. China Shanghai SSE fell -0.18%. Singapore Strait Times fell -0.06%.

    Eurozone CPI finalized at 2.5% in Jan, core CPI holds at 2.7%

    Eurozone headline inflation was finalized at 2.5% yoy in January, ticking up from 2.4% yoy in December. Core CPI, which excludes energy, food, alcohol, and tobacco, remained unchanged at 2.7% yoy.

    The largest contributor to Eurozone inflation was the services sector, which added 1.77 percentage points (pp) to the overall rate. Food, alcohol, and tobacco contributed 0.45 pp, while energy added 0.18 pp, and non-energy industrial goods accounted for 0.12 pp.

    At the EU level, CPI was finalized at 2.8% yoy. The lowest inflation rates were seen in Denmark (1.4%), Ireland, Italy, and Finland (all 1.7%), indicating softer price pressures in some core economies. On the other hand, Hungary (5.7%), Romania (5.3%), and Croatia (5.0%) recorded the highest inflation levels, underlining regional imbalances in price stability.

    Compared to December, inflation fell in eight EU member states, remained unchanged in four, and rose in fifteen.

    German Ifo unchanged at 85.2, businesses waiting to see how things develop

    Germany’s Ifo Business Climate Index was unchanged at 85.2 in February, falling short of expectations for a rise to 85.8. The data reflects that businesses are still “skeptical” about the outlook, “waiting to see how things develop”, according to the Ifo Institute.

    Current Assessment Index dropped from 86.0 to 85.0, missing the forecasted 86.5. However, Expectations Index showed slight improvement, rising from 84.3 to 85.4, exceeding the consensus of 85.2.

    Sector-wise, the manufacturing index improved from -24.8 to -22.1, and trade sentiment rebounded from -29.5 to -26.2. The construction sector also saw a marginal improvement, rising from -28.1 to -27.6. However, services weakened, falling from -2.2 to -4.3.

    New Zealand retail sales rises 0.9% qoq in Q4, ex-auto sales jumps 1.4% qoq

    New Zealand’s Q4 retail sales volume rose 0.9% qoq to NZD 25B, surpassing expectations of 0.6% qoq. Excluding autos, sales jumped 1.4% qoq, well above the 0.3% qoq forecast.

    Sales volume growth was broad-based, with 10 of 15 industries posting gains. The largest increases came from electrical and electronic goods (+5.1%), department stores (+4.2%), and accommodation (+7.6%). Meanwhile, food and beverage services rose 2.3%, but pharmaceutical and other retailing declined -3.4%.

    Retail sales value climbed 1.4% qoq to NZD 30B, with 11 of 15 sectors reporting gains. Price effects were evident, particularly in accommodation (+11%), food and beverage services (+3.3%), and department stores (+2.9%).

    EUR/USD Mid-Day Outlook

    Daily Pivots: (S1) 1.0436; (P) 1.0474; (R1) 1.0499; More…

    EUR/USD’s rally attempt today quickly lost momentum and intraday bias stays neutral. Outlook is unchanged that price actions from 1.0176 are forming a corrective pattern only. Strong resistance is expected from 38.2% retracement of 1.1213 to 1.0176 at 1.0572 to limit upside. On the downside, break of 1.0400 support will turn bias back to the downside for 1.0176/0210 support zone. However, decisive break of 1.0572 will raise the chance of reversal, and target 61.8% retracement at 1.0817.

    In the bigger picture, immediate focus is on 61.8 retracement of 0.9534 (2022 low) to 1.1274 (2024 high) at 1.0199. Sustained break there will solidify the case of medium term bearish trend reversal, and pave the way back to 0.9534. However, reversal from 1.0199 will argue that price actions from 1.1274 are merely a corrective pattern, and has already completed.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    21:45 NZD Retail Sales Q/Q Q4 0.90% 0.60% -0.10% 0.00%
    21:45 NZD Retail Sales ex Autos Q/Q Q4 1.40% 0.30% -0.80% -0.60%
    09:00 EUR Germany IFO Business Climate Feb 85.2 85.8 85.1 85.2
    09:00 EUR Germany IFO Current Assessment Feb 85 86.5 86.1 86
    09:00 EUR Germany IFO Expectations Feb 85.4 85.2 84.2 84.3
    10:00 EUR Eurozone CPI Y/Y Jan F 2.50% 2.50% 2.50%
    10:00 EUR Eurozone CPI Core Y/Y Jan F 2.70% 2.70% 2.70%

     



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