Tag: Stocks

  • Markets Rush to Safe Haven as Tariff Clock Ticks Down

    Markets Rush to Safe Haven as Tariff Clock Ticks Down


    While US investors managed to stay relatively composed through most of last week, the calm cracked heading into the weekend. Stocks saw extended selloffs, Treasury yields dropped, and Gold surged to yet another record high — all classic signs of a decisive flight to safety. With risk appetite now clearly under pressure, traders are no longer waiting to see what happens next. They’ve begun positioning defensively ahead of April 2, dubbed “Liberation Day,” when the US is expected to announce sweeping reciprocal tariffs.

    That looming event, along with inevitable retaliatory measures from trading partners, has injected a fresh wave of uncertainty into the outlook. Risk-off sentiment is likely to dominate US markets in the near term, at least until the full scale of the tariff fallout becomes clear — including possible re-retaliations.

    A big question is whether European markets, which showed notable resilience through March, can continue to defy the global jitters. Stocks in Germany and the UK have largely outperformed US peers, and Euro has led major currencies higher for the month. But the divergence might be tested soon, especially if the trade conflict spills into sectors crucial to the Eurozone’s export-heavy economy.

    Meanwhile, forex markets have remained relatively stable, with most major pairs stuck inside the prior week’s ranges. Kiwi was the lone exception. However, late-week price action across several currency pairs — particularly EUR/USD — suggests that breakouts may be imminent. The common currency is showing signs of bullish potential, with traders watching closely to see whether March strength can evolve into something even more meaningful.

    Ultimately, April could be a make-or-break month for the Euro. Either it confirms a genuine bullish turn, reversing the multi-decade downtrend, or it becomes just another short-lived bounce in a longer-term bearish cycle. Otherwise, the March rally risks being remembered as another false dawn in the common currency’s struggle to reverse its long-term decline.

    Wall Street Sinks as Markets Front-Run Trump’s “Liberation Day” Tariff Blitz

    US equities closed out the week with sharp losses, as fears over the looming escalation in trade tensions and persistent inflation sent risk sentiment spiraling. S&P 500 fell -1.53% on the week, while DOW dropped -0.96%. Tech bore the brunt of the selloff, with NASDAQ sliding -2.59%. That puts the NASDAQ on track for a painful monthly decline of over -8%, which would mark its worst monthly performance since December 2022.

    The market is being squeezed from two ends. On one side, uncertainty over the scope and scale of US tariffs is weighing on sentiment. On the other, resilient inflation data, especially in core readings, is reinforcing expectations that Fed will keep interest rates higher for longer. Together, these twin pressures are raising fears of a broader slowdown in consumer spending, business investment, and overall economic growth, with the risk of tipping the US into recession.

    Trump’s steel and aluminum tariffs have already been in place, but tensions intensified last week as he announced a fresh 25% levy on imported cars and auto parts. That was a mere prelude to what he has dubbed “Liberation Day” on April 2, when the broader reciprocal tariff regime is expected to be unveiled. Stock markets may already be bracing for impact, with traders possibly front-running the announcement, despite the usual quarter-end rebalancing flows.

    The broader concern is that even after the April 2 announcement, the tariff saga won’t be over. Canada and the EU are almost certain to respond with retaliations, and China’s stance remains unclear. Others, like the UK and Australia, are expected to hold back. But should retaliation begin to pile up, there is every chance that Trump will double down with even more aggressive measures, setting off a full-blown global trade war.

    Still, there is a glimmer of hope. If current market anxiety is more about the “uncertainty” surrounding tariffs rather than the “actual impact” of tariffs themselves, there may be room for a sentiment rebound once the details are made clear — hopefully sometime in Q2.

    But that’s a big assumption, and one that relies heavily on the scope, implementation, and global response to the tariffs.

    Technically, S&P 500’s rebound from 5504.65 should have completed at 5786.95, ahead of falling 55 D EMA (now at 5833.15). Focus for the next few days will be back on 5504.65 support. Firm break there will resume the corrective decline from 6147.47 high to 38.2% retracement of 3491.58 to 6147.43 at 5132.89. Strong support should be seen there to contain downside and bring rebound, at least on first attempt.

    Similarly, NASDAQ’s corrective recovery from 17238.23 should have completed at 18281.13, ahead of falling 55 D EMA (now at 18608.86). Break of 17238.23 in the next week days will resume the corrective fall from 20204.58 to 38.2% retracement of 10088.82 to 20204.58 at 16340.36. Strong support should be seen there to bring rebound, at least on first attempt. However, firm break there will pave the way to 15708.53 support next.

    Yields Tumble on Safe Haven Flows, Dollar Index Relatively Resilient

    US 10-year Treasury yields fell sharply on Friday, even as core PCE inflation surprised to the upside. The data highlighted persistent inflationary pressures, with the core PCE accelerating to 2.8% yoy, above expectations and well above Fed’s 2% target. Typically, such data would push yields higher as markets price out rate cuts. However, Friday’s yield decline suggests a different narrative dominated—one of risk aversion.

    Technically, corrective recovery from 4.106 could have already completed at 4.387 after hitting falling 55 D EMA (now at 4.3650). Break of 4.174 support will argue that the whole decline from 4.809 is ready to resume through 4.106 short term bottom. Next target will then be 61.8% projection of 4.809 to 4.106 from 4.387 at 3.952, which is below 4% psychological level.

    More importantly, the next fall will solidify that decline from 4.809 is another leg inside the medium term pattern from 4.997 (2023 high) with risk of extending to 3.603 (2024 low) and below.

    Dollar Index only dipped slightly on Friday and the development argues that corrective recovery from 103.19 might still extend. But even in case of another rise, upside should be limited by 55 D EMA (now at 105.64). Break of 103.19 will resume the fall from 110.17 to 100.15 support next.

    Crucially, the next fall will further solidify the case that decline from 110.17 is the third leg of the pattern from 114.77 (2022 high). Break of 100.15 support will pave the way through 99.57 (2023 low) to 100% projection of 114.77 to 99.57 from 110.17 at 94.97.

    March Belongs to Europe, But Can Momentum Survive April’s Storm?

    Despite rising global trade tensions and the looming threat of reciprocal US tariffs, European currencies and assets have emerged as the standout performers for March. In the equity space, major European indices like Germany’s DAX and the UK’s FTSE have remained relatively insulated from the sharp selloff seen on Wall Street.

    Meanwhile, Euro has led the charge in the currency markets, with Sterling and, to a lesser extent, Swiss Franc following closely. The coming weeks will be critical in determining whether this resilience in European markets can be sustained or even turn into renewed momentum.

    Technically, with 8474.41 resistance turned support intact, FTSE’s price actions from 8908.82 are viewed as a sideway consolidation pattern only. Larger up trend is expected resume through 8908.82 to 100% projection of 7404.08 to 8474.41 from 8002.34 at 9072.67 at a later stage.

    As for the stronger DAX, outlook is staying bullish with 22226.34 support intact, which is close to 55 D EMA (now at 22150.63). Another rise is till expected to 161.8% projection of 14630.21 to 18892.92 from 17024.82 at 23921.87, or even further to 24000 psychological level.

    It’s also important for EUR/USD. The near term pull back from 1.0953 could have already completed at 1.0731, ahead of 38.2% retracement of 1.0358 to 1.0953 at 1.0726. Break of 1.0857 minor resistance should affirm this bullish case, and push EUR/USD through 1.0953 to resume the whole rally from 1.0176.

    More significantly, the next rally would set up EUR/USD for a test on key resistance between 1.1274 (2023 high) and multi-decade falling channel resistance (now at around 1.1380). This resistance zone is crucial to determine whether EUR/USD is reversing the long term down trend.

    USD/JPY Weekly Outlook

    USD/JPY recovered further to 151.20 last week but retreated sharply ahead of 151.29 cluster resistance (38.2% retracement of 158.86 to 146.52 at 151.23). Initial bias remains neutral first and outlook stay bearish. On the downside, below 149.53 minor support will argue that the corrective recovery has completed and bring retest of 146.52 low. Firm break there will resume whole fall from 158.86. However, firm break of 151.23/9 will turn bias back to the upside for 154.79 resistance instead.

    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.

    In the long term picture, it’s still early to conclude that up trend from 75.56 (2011 low) has completed. A medium term corrective phase should have commenced, with risk of deep correction towards 55 M EMA (now at 136.94).



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  • Auto Tariff Hits Wall Street, But Currencies Shrug Off the Drip Feed

    Auto Tariff Hits Wall Street, But Currencies Shrug Off the Drip Feed


    The steady drip of tariff news from US President Donald Trump continued overnight, pushing US equities lower and weighing on risk sentiment globally. The tech-heavy NASDAQ led the decline with a drop of over 2%, while broader US indexes also closed in the red. In Asia, Japan’s Nikkei and South Korea’s Kospi followed with notable declines—particularly in auto stocks—while other regional bourses stayed relatively steady, suggesting selective impact.

    Despite the equity selloff, currency markets have shown muted reactions so far. Major FX pairs and crosses are treading water, largely trapped within yesterday’s ranges. This suggests that while traders are alert to the evolving trade policy, many are experiencing tariff fatigue and are reluctant to reposition aggressively before next week’s pivotal developments.

    The latest tariff news centers around a 25% duty on imported cars and light trucks “not made in the United States,” scheduled to take effect on April 3. However, the rollout comes with key exemptions. Automotive parts compliant with USMCA are spared, and all other auto parts imports are exempt until May 3 to allow time for administrative clarity. It’s a classic case of shock softened by implementation ambiguity.

    The centerpiece remains April 2, which Trump has dubbed “liberation day” and “the big one,” when reciprocal tariffs will be formally announced. However, in a shift of tone, Trump now says the measures will be “very lenient,” and “less than the tariff they’ve been charging (the US) for decades,” hinting at a softer-than-expected rollout. That may explain the relatively calm tone in FX markets despite the ongoing trade drama.

    In terms of currency performance this week, Canadian Dollar is leading the charge along with commodity currencies. Aussie and Kiwi follow, while traditional safe havens like Yen and Dollar are under pressure. Euro joins them as one of the weakest, while Sterling and Swiss Franc are in the middle of the pack.

    Technically, the selloff in NASDAQ overnight is just continuation of the near-term consolidation pattern from the 17238.23 low. Another bounce toward 38.2% retracement of 2024.58 to 17238.23 at 18371.38 remains possible. But strong resistance at the 55 D EMA (now at 18688.06) should cap upside. The larger correction from the 20204.58 peak is still expected to resume eventually, with a break below 17238.23 at a later stage.

    In Asia, at the time of writing, Nikkei is down -0.97%. Hong Kong HSI is up 0.79%. China Shanghai SSE is up 0.23%. Singapore Strait Times is up 0.41%. Japan 10-year JGB yield is up 0.006 at 1.593, approaching 1.6% mark. Overnight, DOW fell -0.31%. S&P 500 fell -1.12%. NASDAQ fell -2.04%. 10-year yield rose 0.031 to 4.338.

    Fed’s Musalem: Persistent tariff inflation could delay cuts or force hikes

    St. Louis Fed President Alberto Musalem warned that while the initial effects of import tariffs may be short-lived, their broader inflationary impact could linger. He stressed concern that underlying inflation may be influenced more persistently than expected, and if so, Fed might have to consider a tighter policy stance.

    Although this isn’t his baseline scenario, Musalem emphasized that the Fed must remain vigilant to second-round effects from tariffs.

    He noted that if inflation stays above the 2% target and the economy remains strong, the current “modestly restrictive” monetary stance would need to be maintained longer.

    More significantly, “If the labor market remains resilient and the second-round effects from tariffs become evident, or if medium- to longer-term inflation expectations begin to increase actual inflation or its persistence, then modestly restrictive policy will be appropriate for longer or a more restrictive policy may need to be considered,” he said.

    BoC minutes: Rate cut driven by tariff threats, signals no guidance amid uncertainty

    BoC’s March 12 Summary of Deliberations revealed that the decision to cut the policy rate by 25 bps to 2.75% was driven primarily by “tariff threats and elevated uncertainty”.

    Governing Council members acknowledged that, under normal circumstances, holding the rate at 3% would have been appropriate. However, the impact of steel and aluminum tariffs, additional tariff threats, and the unpredictable stance of the US administration had begun to materially affect business and consumer decisions. This was “significantly weakening the near-term outlook”.

    Looking ahead, BoC emphasized the complexity of the situation and the fluid nature of trade tensions. “It would not be appropriate to provide guidance on the future path for the policy interest rate,” the minutes noted.

    Looking ahead

    Eurozone M3 money supply is the only feature in European session. Later in the day, US will release Q1 GDP final, goods trade balance, jobless claims and pending home sales.

    EUR/USD Daily Outlook

    Daily Pivots: (S1) 1.0729; (P) 1.0767; (R1) 1.0789; More…

    Outlook in EUR/USD is unchanged that strong support is expected from 38.2% retracement of 1.0358 to 1.0953 at 1.0726 to completion the correction from 1.0953. On the upside, break of 1.0857 will bring retest of 1.0953 first. Firm break there will resume larger rise from 1.0176. However, sustained break of 1.0726 will bring deeper correction to 55 D EMA (now at 1.0630).

    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
    09:00 EUR Eurozone M3 Money Supply Y/Y Feb 3.80% 3.60%
    12:30 USD Initial Jobless Claims (Mar 21) 225K 223K
    12:30 USD GDP Annualized Q4 F 2.30% 2.30%
    12:30 USD GDP Price Index Q4 F 2.40% 2.40%
    12:30 USD Goods Trade Balance (USD) Feb P -134.6B -155.6B
    12:30 USD Wholesale Inventories Feb P 0.70% 0.80%
    14:00 USD Pending Home Sales M/M Feb 0.90% -4.60%
    14:30 USD Natural Gas Storage 37B 9B

     



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  • Sterling Lags After CPI Miss, But BoE Rate Cut to Stay Gradual

    Sterling Lags After CPI Miss, But BoE Rate Cut to Stay Gradual


    Sterling fell broadly today after UK’s February CPI came in slightly below expectations. However, the selloff has been contained, with markets still expecting the BoE to proceed cautiously with policy easing. In particular, services inflation remained sticky at 5%, signaling that underlying price pressures are not abating as quickly as hoped.

    Some economists argue that February’s inflation dip may prove to be a false dawn. The scheduled rise in energy bills and national insurance contributions next month could push inflation back towards 4% level again, undermining hopes of sustained disinflation.

    Against that backdrop, BoE is unlikely to accelerate the pace of rate cuts. Markets still see a 25bps rate reduction as a realistic outcome for BoE’s next meeting in May. That would align with the central bank’s previously communicated strategy of a cautious and gradual easing path, one cut per quarter.

    On the day, Sterling is the weakest performer among major currencies, followed by Yen and Swiss Franc. Commodity currencies continue to lead with Kiwi topping the chart. Dollar and Euro are positioning in the middle of the pack.

    Technically, Nikkei’s near term rebound from 35987.13 appears to be losing momentum at it approaches 55 D EMA. Break of 37608.49 support will indicate rejection by the EMA, and should bring deeper fall through 35897.13 to resume the whole decline from 40398.23. If realized, this down move in Nikkei should be accompanied by another selloff in USD/JPY.

    In Europe, at the time of writing, FTSE is up 0.31%. DAX is down -0.42%. CAC is down -0.49%. UK 10-year yield is up 0.004 at 4.766. Germany 10-year yield is down -0.006 at 2.795. Earlier in Asia, Nikkei rose 0.65%. Hong Kong HSI rose 0.60%. China Shanghai SSE fell -0.04%. Singapore Strait Times rose 0.23%. Japan 10-year JGB yield rose 0.014 to 1.587.

    US durable goods orders rises 0.9% mom in Feb, ex-transport orders up 0.7% mom

    US durable goods new orders rose 0.9% mom to USD 289.3B in February, much better than expectation of -0.7% mom fall.

    Ex-transport orders rose 0.7% mom to USD 190.9B, above expectation of 0.4% mom. Ex-defense orders rose 0.8% mom to USD 271.3B.

    Transportation equipment led the increase, up 1.5% mom to USD 98.3B.

    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.

    ECB’s Panetta: Focus on inflation, not unreliable neutral rate estimates

    Italian ECB Governing Council Member Fabio Panetta urged the central bank to steer its attention toward inflation projections rather than attempting to anchor policy decisions on the elusive concept of the “neutral interest rate” or R-star.

    In a letter to the Financial Times, Panetta argued that the neutral rate is an invisible target that can only be approximated using models and surveys that are “riddled with uncertainty,” especially in today’s volatile environment.

    Panetta warned against ECB becoming “fixated” on labeling its stance as restrictive based on R-star estimates, calling. Instead, he emphasized that the ECB’s efforts should remain firmly grounded in assessing inflation data and determining whether monetary policy is appropriately calibrated to bring inflation sustainably back to the 2% target.

    ECB’s Villeroy sees room for rate cuts to 2% by summer

    French ECB Governing Council member Francois Villeroy de Galhau signaled there is “still scope for further easing,” though he emphasized that the pace and magnitude remain uncertain.

    Speaking to Frankfurter Allgemeine Zeitung, Villeroy acknowledged that current market expectations of ECB rates around 2% by summer represent a “possible scenario,” considering Europe’s summer period spans from June through September.

    He also addressed recent tightening in financial conditions, noting that the rise in long-term bond yields—triggered by Germany’s massive defense and infrastructure spending plans—must be factored into ECB’s monetary policy assessment.

    The spending surge, aimed at countering a perceived US retreat in global leadership, has raised concerns about its inflationary impact. However, Villeroy downplayed those risks, arguing that Europe’s weak domestic demand could offset inflationary pressure from higher public expenditure.

    He added that if such fiscal spending is coupled with expanded industrial supply, the inflation impact would likely be limited.

    UK CPI slows to 2.8% in Feb, core down to 3.5%

    UK CPI slowed from 3.0% yoy to 2.8% yoy in February, below expectation of 2.9% yoy. CPI Core (excluding energy, food, alcohol and tobacco) fell from 3.7% yoy to 3.5% yoy, below expectation of 3.6% yoy.

    CPI goods annual rate slowed from 1.0% to 0.8%, while the CPI services annual rate was unchanged at 5.0%.

    On a monthly basis, CPI rose by 0.4% mom.

    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.

    GBP/USD Mid-Day Outlook

    Daily Pivots: (S1) 1.2909; (P) 1.2938; (R1) 1.2974; More…

    Intraday bias in GBP/USD remains neutral for the moment. Corrective fall from 1.3013 short term top could still continues. Below 1.2886 will target near term channel support (now at 1.2782) and possibly below. But downside should be contained by 38.2% retracement of 1.2248 to 1.3013 at 1.2721 to bring rebound. On the upside, break of 1.3013 will resume the rally from 1.2099.

    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
    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 0.40% 0.50% -0.10%
    07:00 GBP CPI Y/Y Feb 2.80% 2.90% 3%
    07:00 GBP Core CPI Y/Y Feb 3.50% 3.60% 3.70%
    07:00 GBP RPI M/M Feb 0.60% 0.80% -0.10%
    07:00 GBP RPI Y/Y Feb 3.40% 3.60% 3.60%
    09:00 CHF UBS Economic Expectations Mar -10.7 3.4
    12:30 USD Durable Goods Orders Feb 0.90% -0.70% 3.20%
    12:30 USD Durable Goods Orders ex Transportation Feb 0.70% 0.40% 0%
    14:30 USD Crude Oil Inventories 1.5M 1.7M
    17:30 CAD BoC Summary of Deliberations

     



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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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  • Yen Rebounds on Risk-Off Mood in Asia, Focus Shifts to SNB and BoE

    Yen Rebounds on Risk-Off Mood in Asia, Focus Shifts to SNB and BoE


    Asian markets are showing signs of mild risk-off sentiment today, with Hong Kong and China stocks retreating from recent gains. The weaker regional tone contributed to a stronger Yen. Additionally, Yen’s rebound is also fueled by post-FOMC Dollar softness. The technical picture suggests that the recent pullback in Yen against Dollar has likely run its course, allowing the currency to regain some ground.

    Meanwhile, the weaker regional sentiment has put pressure on New Zealand Dollar, despite the strong GDP data that showed the country exiting recession. Aussie is also under pressure, not just due to the broader market risk aversion but also because of softer-than-expected employment data, which saw a surprise contraction in jobs. While both the Kiwi and Aussie have had some resilience earlier this week, today’s price action suggests that traders are probably turning more cautious.

    SNB rate decision will be the first major focus in the European session, with the central bank widely expected to deliver another 25bps rate cut. A key question is whether SNB signals that the current easing cycle is nearing its end. Attention will then shift to BoE, which is widely expected to keep its benchmark interest rate steady. The focus will be on the voting composition within the MPC.

    For the week so far, Dollar is currently the worst performer, followed by Euro and Aussie. On the other hand, Swiss Franc is the strongest, followed by Kiwi and Sterling. Loonie and Yen are positioning in the middle, with Yen’s outlook improving due to today’s risk-off flows.

    In Asia, Japan is on holiday. Hong Kong HSI is down -1.51%. China Shanghai SSE is down -0.25%. Singapore Strait Times is up 0.67%. Overnight, DOW rose 0.92%. S&P 500 rose 1.08%. NASDAQ rose 1.41%. 10-year yield fell -0.025 to 4.256.

    US stocks recovered as Fed sticks to two rate cut outlook for 2025

    US stocks closed higher overnight, and extended their near-term consolidations. Investors were somewhat relieved that Fed maintained its outlook for two rate cuts this year. However, the central bank also introduced a note of caution, warning in its statement that “uncertainty around the economic outlook has increased” and that it remains “attentive to the risks to both sides of its dual mandate.”

    In the post-meeting press conference, Chair Jerome Powell explicitly addressed the impact of tariffs. He warned that “the arrival of tariff inflation may delay further progress” on disinflation. He also noted that Fed’s quarterly summary of economic projections does not show further downward progress on inflation this year, attributing this to new tariffs coming into effect.

    This acknowledgment reinforces the stance that while rate cuts remain in the pipeline, the timing and extent of policy easing will depend on how inflation evolves in the face of trade disruptions and supply chain adjustments.

    Fed left its benchmark interest rate unchanged at 4.25-4.50%, a widely expected move. Fed fund futures now assign roughly 70% probability that the next rate cut will come in June, compared to just 47% a month ago.

    Technically, S&P 500 turned into consolidations after falling to 5504.65 last week. 55 W EMA (now at 5596.07) could offer some support for a near term recovery. But risk will stay on the downside as long as 55 D EMA (now at 5873.77) holds.

    On resumption, fall from 6147.43, as a correction to the rise from 3491.58, should target 38.2% retracement at 5132.89.

    New Zealand GDP exits recession with stronger-than-expected 0.7% qoq growth in Q4

    New Zealand’s economy expanded by 0.7% qoq in Q4, surpassing expectations of 0.4% qoq and officially pulling the country out of recession. However, the broader picture remains mixed, as GDP still declined by -0.5% yoy, reflecting the lingering impact of previous contractions.

    The positive quarterly growth was driven by expansions in 11 out of 16 industries, with the rental, hiring, and real estate sector, retail trade, and healthcare services leading the gains.

    Despite the overall improvement, some key sectors struggled, with construction and information media & telecommunications posting declines.

    Still, a major positive takeaway from the report is that GDP per capita rose by 0.4% in Q4, marking its first increase in two years.

    Australian employment plunges -52.8k in Feb, unemployment rate unchanged at 4.1%

    Australia’s employment dropped sharply by -52.8k in February, significantly missing market expectations of 30k gain. The decline was broad-based, with full-time jobs falling by -35.7k and part-time employment down by -17k.

    Unemployment rate remained steady at 4.1%, in line with forecasts. The participation rate declined by -0.4% to 66.8%, suggesting that fewer people were actively seeking work, which helped keep the jobless rate from rising. Additionally, monthly hours worked fell by -0.4% mom, reflecting softer labor market conditions.

    The Australian Bureau of Statistics attributed part of the decline in employment to fewer older workers re-entering the labor force. However, the broader trend still points to resilience in the job market, with employment up by 266k people, or 1.9%, compared to last year. The annual employment growth rate remains close to the 20-year pre-pandemic average of 2.0%.

    SNB to cut, BoE to hold, a look at GBP/CHF

    Two major central banks will announce their monetary policy decisions today, with SNB leading, followed by BoE.

    SNB is widely expected to lower its policy rate by 25bps to 0.25%. With inflation at just 0.3% in February, well below the mid-point of target range, there is both room and necessity for further easing to keep medium-term inflation expectations anchored closer to 1%.

    However, the urgency for additional policy support appears to be diminishing, especially with growing optimism around Eurozone economy. Stronger Eurozone growth, driven by major fiscal expansion plans, is expected to lift Euro and boost demand for Swiss exports, which could help mitigate recession and deflation risks in Switzerland.

    A Reuters poll of economists showed that most expect rates to remain at 0.25% by year-end, while 10 foresee a move to 0%, and only three expect SNB to maintain the current 0.50% level.

    Meanwhile, BoE is widely expected to hold its Bank Rate steady at 4.5%, with little change to its cautious forward guidance. A Reuters poll of 61 economists showed unanimous expectations for a rate hold today, with the next cuts projected for May, August, and November.

    The key focus for markets will be whether any additional Monetary Policy Committee members join Catherine Mann and Swati Dhingra in voting for an immediate rate cut, which could signal a shift toward a more dovish stance in the coming months.

    Technically, while GBP/CHF extended the rally from 1.1086, it has clearly struggled to find convincing momentum. It’s plausible that this rise is the third leg of the corrective rebound from 1.0741, which has already completed after meeting 61.8% projection of 1.0741 to 1.1368 from 1.1086 at 11437. Break of 1.1299 support will solidify this bearish case and bring deeper fall back to 1.1086 support. Nevertheless firm break of 1.1501 will pave the way to 1.1675 resistance next.

    USD/JPY Daily Outlook

    Daily Pivots: (S1) 148.15; (P) 149.15; (R1) 149.69; More…

    USD/JPY’s currently steep decline suggests rejection by near term falling channel resistance. Immediate focus is now on 148.22 minor support. Firm break there will indicate that corrective rebound from 146.52 has completed and bring retest of this low first. Sustained trading below 61.8% retracement of 139.57 to 158.86 at 146.32 will resume the fall from 158.86 to 139.57 support. In case of another recovery, upside should be limited by 150.92 support turned resistance.

    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
    21:45 NZD GDP Q/Q Q4 0.70% 0.40% -1.00% -1.10%
    00:30 AUD Employment Change Feb -52.8K 30K 44K 30.5K
    00:30 AUD Unemployment Rate Feb 4.10% 4.10% 4.10%
    01:00 CNY 1-Y Loan Prime Rate 3.10% 3.10% 3.10%
    01:00 CNY 5-Y Loan Prime Rate 3.60% 3.60% 3.60%
    07:00 CHF Trade Balance (CHF) Feb 5.01B 6.12B
    07:00 EUR Germany PPI M/M Feb 0.20% -0.10%
    07:00 EUR Germany PPI Y/Y Feb 1.00% 0.50%
    07:00 GBP Claimant Count Change Feb 7.9K 22K
    07:00 GBP ILO Unemployment Rate (3M) Jan 4.50% 4.40%
    07:00 GBP Average Earnings Including Bonus 3M/Y Jan 5.90% 6.00%
    07:00 GBP Average Earnings Excluding Bonus 3M/Y Jan 5.90%
    08:30 CHF SNB Interest Rate Decision 0.25% 0.50%
    09:00 CHF SNB Press Conference
    09:00 EUR ECB Economic Bulletin
    11:00 GBP BoE Interest Rate Decision 4.50% 4.50%
    11:00 GBP MPC Official Bank Rate Votes 0–2–7 0–9–0
    12:30 CAD Industrial Product Price M/M Feb 0.30% 1.60%
    12:30 CAD Raw Material Price Index M/M Feb -0.30% 3.70%
    12:30 USD Current Account (USD) Q4 -337B -311B
    12:30 USD Initial Jobless Claims (Mar 14) 222K 220K
    12:30 USD Philadelphia Fed Survey Mar 12.1 18.1
    14:00 USD Existing Home Sales Feb 3.92M 4.08M
    14:30 USD Natural Gas Storage 3B -62B

     



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  • Asian Markets Stay Firm, German Vote and Canadian Inflation in Focus

    Asian Markets Stay Firm, German Vote and Canadian Inflation in Focus


    Risk appetite in Asian markets has been solid this week, support by optimism surrounding China’s latest measures to boost domestic consumption. Hong Kong stocks continue to lead gains in the region. Meanwhile, in the forex markets, both New Zealand and Australian Dollars are holding firm, though the Aussie is slightly lagging due to rising trade tensions with the US. As tariff threats continue to evolve, the Australian economy is relatively more vulnerable to disruptions in trade, keeping a cap on the currency’s momentum. Meanwhile,

    Japanese Yen has weakened notably, weighed down by the prevailing risk-on sentiment in the region. Additionally, traders are solidifying expectations that BoJ will keep rates unchanged in this week’s policy decision, leaving any rate hike for future meetings. Though, any hints from Governor Kazuo Ueda about the timing of future hikes could rejuvenate Yen’s rebound. .

    In Europe, attention turns to Germany, where ZEW economic sentiment index is expected to show early signs of optimism surrounding the incoming government’s EUR 500B infrastructure and defense spending plan. Also, Chancellor-in-waiting Friedrich Merz faces a crucial parliamentary vote on this plan today, and while it is broadly expected to pass, there remains an outside risk of legal intervention. The far-right Alternative für Deutschland party has challenged the speed of the legislation’s introduction. Merz might get the court’s verdict soon.

    Meanwhile, Canada’s inflation data will be in focus, as markets assess BoC’s next policy steps, which are heavily complicated by trade war. OECD has significantly downgraded Canada’s growth forecast, citing trade war risks and economic fallout from US tariffs. However, OECD also warned of inflationary pressures, suggesting that if Canada faces 25% retaliatory tariffs from the US, borrowing costs could stay higher for longer. This places the BoC in a difficult position, as it must balance slowing growth with the risk of persistent price pressures.

    Technically, EUR/CAD should have formed a short term top at 1.5856 on bearish divergence condition in 4H MACD. Deeper retreat might be seen to 55 4H EMA (now at 1.5548). But downside should be contained by 1.5401 cluster support (38.2% retracement of 1.4740 to 1.5856 at 1.5430 to bring rebound. Larger up trend is expected to resume through 1.5856 at a later stage.

    In Asia, at the time of writing, Nikkei rose 1.23%. Hong Kong HSI is up 2.12%. China Shanghai SSE is up 0.14%. Singapore Strait Times is up 1.12%. Japan 10-year JGB yield is up 0.0.007 at 1.510. Overnight, DOW rose 0.85%. S&P 500 rose 0.64%. NASDAQ rose 0.31%. 10-year yield fell -0.002 to 4.306.

    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.

    Gold extends record run above 3000 on geopolitical and trade risks

    Gold surged further above the 3000 psychological level today, extending its record-breaking rally as geopolitical uncertainty, trade tensions, and global monetary easing continue to fuel demand.

    Trade tensions remain front and center with investors are piling into the precious metal ahead of the April 2 deadline, when reciprocal and sectoral tariffs will take effect on US trading partners. US President Donald Trump reinforced his stance, declaring that the new tariffs would mark “liberation day” for the US, with broader reciprocal tariffs and sector-specific duties, particularly on steel and aluminum used in auto production.

    Meanwhile, attention is also on Trump’s call with Russian President Vladimir Putin today, where discussions will reportedly cover territorial issues and energy infrastructure, likely including Ukraine’s Zaporizhzhia nuclear plant. Any escalation or breakthrough in these discussions could have broader implications for markets,

    Technically, Gold’s up trend remains on track to 61.8% projection of 2584.24 to 2956.09 from 2832.41 at 3062.21. which is close to the medium-term channel resistance.

    Rejection by the resistance zone, followed by break of 2956.09 resistance turned support will risk a correction back towards 55 D EMA (now at 2841.83) first.

    However, strong break above the channel resistance would prompt acceleration in Gold’s uptrend. In such a scenario, gold could quickly reach 100% projection at 3204.26.

    Looking ahead

    Swiss SECO economic forecasts, German ZEW economic sentiment, and Eurozone trade balance will be released in European session. Later in the day, Canada CPI will be the main focus. US will publish housing starts and building permits, import prices, and industrial production.

    USD/JPY Daily Outlook

    Daily Pivots: (S1) 147.89; (P) 148.45; (R1) 149.20; More…

    Intraday bias in USD/JPY stays neutral at this point. While recovery from 146.52 might extend further, upside should be limited by 150.92 support turned resistance. On the downside, below 148.22 minor support will bring retest of 146.52 low first. Sustained trading below 61.8% retracement of 139.57 to 158.86 at 146.32 will pave the way to 139.57 support. However, decisive break of 150.92 will dampen this bearish view and turn bias to the upside for 154.79 resistance instead.

    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
    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 14.1B 14.6B
    10:00 EUR Germany ZEW Economic Sentiment Mar 48.1 26
    10:00 EUR Germany ZEW Current Situation Mar -80.5 -88.5
    10:00 EUR Eurozone ZEW Economic Sentiment Mar 43.6 24.2
    12:30 CAD CPI M/M Feb 0.60% 0.10%
    12:30 CAD CPI Y/Y Feb 2.10% 1.90%
    12:30 CAD CPI Median Y/Y Feb 2.70% 2.70%
    12:30 CAD CPI Trimmed Y/Y Feb 2.80% 2.70%
    12:30 CAD CPI Common Y/Y Feb 2.20% 2.20%
    12:30 USD Building Permits Feb 1.45M 1.47M
    12:30 USD Housing Starts Feb 1.38M 1.37M
    12:30 USD Import Price Index M/M Feb -0.10% 0.30%
    13:15 USD Industrial Production M/M Feb 0.20% 0.50%
    13:15 USD Capacity Utilization Feb 77.80% 77.80%

     



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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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  • Currency Markets Consolidate as Trader Start Repositioning for Tariff Battles in April

    Currency Markets Consolidate as Trader Start Repositioning for Tariff Battles in April


    The past week in the currency markets was marked more by consolidation than decisive moves, even as risk aversion deepened in US stock markets. Dollar’s selloff slowed and turned into a modest recovery, but there was no clear momentum for bullish trend reversal. Sentiment remained fragile, weighed down by constantly escalating trade tensions and the growing impact of tariffs on American consumer and business confidence. However, with stocks and Dollar both looking oversold, markets appear to have found a temporary reprieve, allowing for some short-term stabilization.

    That said, this pause does not indicate a shift in sentiment, but rather reflects a phase of profit-taking and repositioning. Traders seem to be adjusting their positions ahead of the critical tariff showdown in April, when reciprocal trade measures on key US trading partners are expected to take effect. As markets brace for the next wave of developments, uncertainty and indecisiveness have become dominant themes. This is evident in the fact that only three currency crosses closed outside their prior week’s ranges, highlighting a lack of conviction in directional moves.

    Among the currency performers, New Zealand Dollar overtook Euro at last hours as the week’s strongest, but its gains lacked clear momentum for a sustained uptrend. Australian Dollar, which came in third, and Kiwi appeared to be mostly digesting their recent losses, aided by a modest stabilization in risk sentiment.

    While these currencies showed some resilience, they have yet to break out of their broader downtrends, and further gains will likely depend on how global markets react to the next round of trade developments.

    Euro, despite slipping to second place, could soon regain momentum, especially as Germany’s major political parties reached a breakthrough on a historic debt deal.

    On the weaker side, Japanese Yen, Swiss Franc, and Dollar ranked as the bottom three performers. Meanwhile, Sterling and Canadian Dollar closed the week in the middle of the pack

    Stocks Sink for the Week Despite Friday’s Rebound, April Set to Be Crucial

    US stocks suffered significant losses last week, with DOW plummeting -3.1% for its worst weekly performance since March 2023. Both S&P 500 and NASDAQ also slipped more than -2% and notched their fourth consecutive week in the red. While a strong rebound on Friday briefly lifted spirits—becoming the best single day of 2025 for S&P 500 and NASDAQ—these gains were insufficient to salvage the broader downtrend that has gripped the market.

    Friday’s bounce appeared to be more of a technical rebound than a shift in fundamentals. With the major indices down 10% from their all-time highs, markets had reached oversold conditions, making them ripe for short traders to take profits. However, the broader narrative remains bearish, at least for the near term. .

    Tariff uncertainties will continue to cap upside momentum in stocks, at least through April. The critical turning point would come on April 2, when reciprocal tariffs from US are set to be announced. The corresponding retaliatory measures from the European Union, Canada, China, and Japan—and the potential for further US escalation in response—will dictate how deep the economic impact may run. The developments in the second quarter will ultimately determine whether the US markets are in merely a medium-term correction or entering an outright bear market.

    For S&P 500, fall from 6147.43 is currently seen as a correction to the up trend from 3491.58 (2022 low) only. While further decline remains in favor, downside should be contained by 38.2% retracement of 3491.58 to 6147.43 at 5132.89.

    However, firm break of 5132.89 will raise the chance of long term reversal, and target trend line support (now at around 4740).

    Similarly, DOW should now be in correction to the whole rally from 28660.94 (2022 low). While further fall is expected, downside should be contained by 38.2% retracement of 28660.04 to 45703.63 at 38803.98. However, sustained break of this fibonacci level will argue that larger scale reversal is underway.

    Dollar Index May Stabilize Around 61.8% Retracement Level, But Downside Risks Remain

    The sharp decline in Dollar Index slowed last week, as market expectations for Fed’s next rate cut have shifted back from May to June. Despite softer-than-expected consumer inflation data, traders are acknowledging that Fed will likely need more time to assess the economic impact of escalating tariffs before making a policy move.

    June FOMC meeting offers the central bank a broader window to evaluate the full effects of reciprocal trade measures and any additional retaliatory tariffs. Additionally, Fed will have a fresh set of economic projections by then, providing a more comprehensive view of inflation, growth, and labor market trends.

    Technically, Dollar Index is now hovering around 61.8% retracement of 99.57 to 110.17 at 103.61. This level could provide some short-term stabilization, particularly as D RSI also suggests oversold conditions. Some consolidations might follow first, or even a notable recovery.

    However, risks will continue to stay on the downside as long as 55 D EMA (now at 106.37) holds. Sustained break of 103.61 will extend the fall from 110.17 to 99.57 low (2023 low).

    Eurozone Confidence Surges, DAX and Euro Poised for Further Gains

    Euro and Germany’s DAX lost some momentum last week, but Friday’s bounce suggests both may be gearing up to extend their recent rallies.

    In a major political breakthrough, Chancellor-in-waiting Friedrich Merz announced on Friday that he had secured the backing of the Greens for a massive increase in state borrowing. With support from the Social Democrats already in place, Merz now has the two-thirds parliamentary majority required to pass constitutional amendments.

    The highly anticipated vote is scheduled for next week and, if approved, would mark a historic shift in Germany’s fiscal policy, paving the way for significant infrastructure and defense spending.

    Merz’s declaration that “Germany is back” highlighted the renewed optimism surrounding both the German and broader European economies.

    This growing confidence is also reflected in recent sentiment indicators. Eurozone Sentix Investor Confidence Index surged from -12.7 to -2.9 in March, reaching its highest level since June 2024. More notably, Expectations Index skyrocketed from 1.0 to 18.0, marking its third consecutive monthly increase and the highest level since July 2021. This surge represents the largest monthly improvement since 2012.

    Germany’s investor confidence has also rebounded sharply, signaling a significant turnaround in market expectations. The German Sentix Investor Confidence Index jumped from -29.7 to -12.5, its strongest level since April 2023. Meanwhile, the Expectations Index surged from -5.8 to 20.5, reaching its highest point since July 2021.

    For DAX, near term outlook stays bullish with 22226.34 support intact. Current trend should continue to 161.8% projection of 14630.21 to 18892.92 from 17024.82 at 23921.87. Decisive break there would pave the way to 200% projection 25550.22 next.

    Nevertheless, rejection by 23921.87 will indicate medium term topping, on bearish divergence condition in D MACD. DAX should then turn into consolidations, until fresh catalyst pushes it through to new records.

    The key for Euro remains on whether EUR/CHF could decisively break through the long term channel resistance to solidify its bullish trend reversal. In this case, stronger rally should be seen to 0.9928 resistance at least.

    However, break of 0.9489 support will suggest rejection by the channel resistance, and keep outlook bearish for EUR/CHF, which might also be an indication of Euro’s outlook elsewhere.

    NZD/JPY as a Top Gainer, But Bearish Trend Remains Intact

    NZD/JPY was among the top-performing currency pairs last week, rising by over 1.1%. However, the crosses continued to trade within falling channel that originated from 92.45 high. It’s also capped well below 55 D EMA (now at 86.45).

    Thus, while the current rebound signals some near-term buying interest, the broader technical picture remains bearish.

    On the upside, NZD/JPY could face strong resistance from 86.71 (38.2% retracement of 92.45 to 83.14 at 86.96). Only a firm break of this cluster resistance zone would confirm bullish trend reversal.

    Otherwise, fall from 92.45 is still in favor to continue. Indeed, firm break of 83.02 (2024 low) will resume whole down trend from 99.01 (2024 high).

     

    USD/JPY Weekly Outlook

    USD/JPY edged lower to 146.52 last week but recovered since then. Initial bias remains neutral this week for more consolidations. Upside of recovery should be limited by 150.92 support turned resistance. On the downside, sustained trading below 61.8% retracement of 139.57 to 158.86 at 146.32 will pave the way to 139.57 support.

    In the bigger picture, price actions from 161.94 are seen as a corrective pattern to rise from 102.58 (2021 low), with fall from 158.86 as the third leg. Strong support should be seen from 38.2% retracement of 102.58 to 161.94 at 139.26 to bring rebound. However, sustained break of 139.26 would open up deeper medium term decline to 61.8% retracement at 125.25.

    In the long term picture, it’s still early to conclude that up trend from 75.56 (2011 low) has completed. A medium term corrective phase should have commenced, with risk of deep correction towards 55 M EMA (now at 136.88).



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  • Equities Extend Losses on Tariff Fears, But Forex Markets Hold Steady in Consolidation

    Equities Extend Losses on Tariff Fears, But Forex Markets Hold Steady in Consolidation


    US stock markets suffered another brutal session overnight, with NASDAQ leading the decline, shedding nearly -2%. All three major indexes closed below their respective 55 W EMAs, reinforcing the bearish case that the markets are now in a medium-term correction phase. This technical breakdown suggests that downside momentum is gaining traction, with investors recalibrating their expectations amid escalating economic uncertainty, particularly regarding the relentless stream of tariff threats.

    A major driver of the selloff remains the intensifying trade war, which shows no signs of slowing down. Tariff threats are mounting almost daily, as analysts argue that markets have yet to fully price in the potential economic fallout. The momentum of these escalations is expected to persist well into the second quarter, particularly with reciprocal tariffs set to take effect in April.

    The European Union has already signaled its intent to retaliate against US tariffs, and similar counter measures would be seen from other countries too. Beyond the EU response, additional tariffs are in the pipeline, targeting China with higher duties, and likely extending to non-border-related tariffs against Canada and Mexico. Japan could also find itself in Washington’s crosshairs, particularly over criticism about its weak currency. The sheer breadth of these tariff initiatives suggests that the market’s current adjustment may just be the beginning of a broader risk-off shift. Investors have just started offloading positions to hedge against further risks.

    Meanwhile, despite the turbulence in equities, currency markets have remained relatively steady. So far this week, the Sterling is currently the strongest performer, followed by Euro and Dollar. On the weaker end of the spectrum, Swiss Franc is the worst performer, trailed by Loonie and Aussie. Kiwi and Yen are positioned in the middle. However, almost all major currency pairs and crosses are still trading within last week’s range, suggesting that the forex market is in a consolidation phase.

    Looking ahead, today’s key data releases—UK GDP and the University of Michigan consumer sentiment and inflation expectations—will be closely watched. U.S. consumer sentiment has already plunged by -10 points over the past two months, reflecting the growing unease surrounding tariff policies. A further steep decline in sentiment could significantly heighten recession fears and deepen the market’s risk-off mood.

    In Asia, at the time of writing, Nikkei is up 0.87%. Hong Kong HSI is up 2.33%. China Shanghai SSE is up 1.71%. Singapre Strait Times is down -0.21%. Japan 10-year JGB yield is down -0.018 at 1.528. Overnight, DOW fell -1.30%. S&P 500 fell -1.39%. NADSAQ fell -1.96%. 10-year yield fell -0.044 to 4.274.

    NZ BNZ manufacturing hits 53.9 as recovery gains unexpected momentum

    New Zealand’s BusinessNZ Performance of Manufacturing Index rose from 51.7 to 53.9 in February, marking its highest level since August 2022.

    This solid improvement was driven by stronger production (52.4) and new orders (51.5), both also reaching their best levels since August 2022. Meanwhile, employment surged to 54.0, climbing 3.2 points from January and hitting its highest level since September 2021.

    Despite the stronger data, business sentiment remains cautious. The proportion of negative comments from respondents rose to 59.5% in February, up from 57.7% in January. Many manufacturers cited weak orders and sluggish sales as ongoing challenges, signaling that while expansion has resumed.

    BNZ’s Senior Economist Doug Steel welcomed the sustained improvement, noting that “pickup may be a bit faster than we are currently forecasting”.

    Gold hits record high, approaches 3000 amid ceasefire deadlock

    Gold’s up trend resumed overnight and surged to new record highs as the precious metal remains well-supported by escalating global uncertainties. The psychological 3000 level is now in sight as investors flock to the safe-haven asset. The rally is being fueled by multiple factors, including intensifying trade tensions, stalemate in Ukraine-Russia ceasefire negotiations, and the extended broad selloff in US stock markets.

    In particular, the latest developments surrounding the ceasefire talks between Russia and Ukraine have kept uncertainty high. Russian President Vladimir Putin stated that he agreed to the US-led ceasefire proposal in principle but stopped short of fully endorsing it.

    Putin indicated that further discussions with US President Donald Trump would be necessary to ensure that the ceasefire results in a “long-term peace” and addresses the “root causes” of the conflict. He also expressed skepticism, questioning whether the proposed 30-day ceasefire would be used to “supply weapons” or “train newly mobilized units,” and raised concerns over how violations would be monitored.

    Trump, in response, acknowledged that early reports from Russia were “going OK,” but added that “doesn’t mean anything until we hear what the final outcome is.”

    With the ceasefire deal still hanging in the balance, geopolitical risks stays high.

    Technically, the next near term target for Gold is 61.8% projection of 2584.24 to 2956.09 from 2832.41 at 3062.21.

    However, a key test lies ahead in the medium-term rising channel resistance, which has capped price advances since early 2024. Rejection at this level would still maintain gold’s bullish trend but keep its momentum in check.

    On the other hand, decisive breakout above the channel resistance would signal acceleration in Gold’s uptrend. In such a scenario, gold could quickly reach 100% projection level at 3204.26.

    USD/CAD Daily Outlook

    Daily Pivots: (S1) 1.4384; (P) 1.4418; (R1) 1.4477; More…

    Intraday bias in USD/CAD stays neutral as sideway trading continues. Price actions from 1.4791 high are seen as a corrective pattern, with rebound from 1.4150 as the second leg. On the upside, break of 1.4541 will target 100% projection of 1.4150 to 1.4541 from 1.4238 at 1.4629 and above. But for now, strong resistance is expected from 1.4791 to limit upside to bring the third leg. On the downside, break of 1.4238 will confirm that the third leg has 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.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    21:30 NZD Business NZ PMI Feb 53.9 51.4 51.7
    07:00 EUR Germany CPI M/M Feb F 0.40% 0.40%
    07:00 EUR Germany CPI Y/Y Feb F 2.30% 2.30%
    07:00 GBP GDP M/M Jan 0.10% 0.40%
    07:00 GBP Industrial Production M/M Jan -0.10% 0.50%
    07:00 GBP Industrial Production Y/Y Jan -0.70% -1.90%
    07:00 GBP Manufacturing Production M/M Jan 0.00% 0.70%
    07:00 GBP Manufacturing Production Y/Y Jan -0.40% -1.40%
    07:00 GBP Goods Trade Balance (GBP) Jan -17.1B -17.4B
    12:30 CAD Manufacturing Sales M/M Jan 2.00% 0.30%
    12:30 CAD Wholesale Sales M/M Jan 1.80% -0.20%
    14:00 USD UoM Consumer Sentiment Mar P 63.8 64.7
    14:00 USD UoM Inflation Expectations Mar P 3.50%

     



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  • Forex Steadies Despite Fresh Tariff Escalations, Euro Starting to Retreat

    Forex Steadies Despite Fresh Tariff Escalations, Euro Starting to Retreat


    Forex markets are holding steady in Asian session today, with major currency pairs and crosses all confined within yesterday’s ranges. This lack of movement comes despite a significant escalation in the US-led trade war, as newly effective 25% tariffs on all imported steel and aluminum products have prompted swift retaliation from key trading partners.

    In swift response, European Commission President Ursula von der Leyen announced that the EU would implement retaliatory tariffs of equal value, totaling USD 28B, on a range of U.S. goods beyond just metals. These measures, set to take effect on April 1, will target products including textiles, home appliances, and agricultural goods. Meanwhile, Canada—the largest supplier of steel and aluminum to the U.S.—is hitting back with USD 20.7B in countermeasures, including a 25% tariff on steel products and increased taxes on US imports ranging from computers and servers to sports equipment and cast-iron products.

    The UK has so far taken a more measured stance, with Prime Minister Keir Starmer stating that his government is adopting a “pragmatic approach” while keeping “all options on the table.” Australia, on the other hand, has opted against imposing retaliatory tariffs for now. Instead, Prime Minister Anthony Albanese has urged Australians to support local industries in response to Trump’s refusal to grant an exemption for Australian steel and aluminum.

    On the currency front, Swiss Franc is so far the weakest performer this week, followed by Loonie and then Dollar. Euro remains the strongest but has begun to pull back in some crosses, with Sterling and Kiwi following. Yen and Aussie are positioned in the middle.

    Technically, EUR/CAD could have formed a short term top at 1.5856, ahead of 200% projection of 1.4483 to 1.5058 from 1.4740 at 1.5890. Some consolidations would be seen with risk of deeper retreat to 55 4H EMA (now at 1.5470). But downside should be contained by 1.5401 support to bring rebound, and up trend resumption later.

    In Asia, at the time of writing, Nikkei is up 0.09%. Hong Kong HSI is down -1.44%. China Shanghai SSE is down -0.73%. Singapore Strait Times is down -0.03%. Japan 10-year JGB yield is up 0.017 at 1.541. Overnight, DOW fell -0.20%. S&P 500 rose 0.49%. NASDAQ rose 1.22%. 10-year yield rose 0.030 to 4.318.

    BoJ’s Ueda expects real wages to rise, boosting consumption

    BoJ Governor Kazuo Ueda signaled optimism about Japan’s economic outlook, telling the parliament today that “import-cost-driven inflation” is expected to moderate while wages continue to “rise steadily.” This shift could lead to an improvement in real wages and consumption, a critical factor for sustaining domestic demand.

    Ueda’s comments align with recent developments in Japan’s annual “shunto” wage negotiations, which have resulted in record pay hikes across major companies.

    Hitachi announced a record 6.2% rise in monthly wages, fully meeting union demands. Toyota’s key auto parts supplier, Denso, also committed to historic pay hikes, while Toyota itself stated that the overall wage increase for its manufacturing staff would match last year’s levels—the highest seen since 1999.

    Further clarity on the scale of wage hikes will come on March 14, when Rengo, Japan’s largest labor union federation representing 7 million workers, releases its preliminary report. Rengo had been seeking an average wage increase of 6.09%, up from last year’s 5.85%.

    US stocks find temporary support, but downside risks persist

    Risk sentiment showed signs of stabilization in the US overnight, with S&P 500 and NASDAQ posting gains. However, stocks are merely digesting recent steep losses rather than having a decisive turnaround.

    The reaction to lower-than-expected US consumer inflation data was relatively muted. The market’s cautious interpretation of the data is justified, as the latest CPI figures do not yet capture the full effects of tariff-related price pressures. There is still a lack clarity on how inflation will evolve under the new tariff regime, particularly when reciprocal tariffs come into play on April 2. Nevertheless, for the moment at least, disinflationary momentum is leaning in the Fed’s favor.

    Interestingly, market pricing has shifted the expected timing of Fed’s next rate cut back from May to June. Futures now show just 31% probability of a 25bps cut in May, while the odds for a June cut have climbed to 78%.

    Traders appear to believe Fed will need additional time to assess the economic impact of tariffs before making a policy move. From a timing perspective, June would align better with Fed’s next round of economic projections, allowing policymakers to incorporate more data into their decision-making.

    As for NASDAQ, oversold condition as seen in D RSI could start to slow downside momentum, and some near term consolidations cannot be ruled out. But risk will stay on the downside as long as 18604.46 resistance holds. Fall from 20204.58 is seen as a correction to the whole up trend from 10088.82 (2022 low) at least. It should extend to 38.2% retracement of 10088.82 to 20204.58 at 16340.36 before bottoming.

    Gold gains as markets await Russia’s response to ceasefire proposal

    Gold picked up momentum as investors closely monitor Kremlin’s response to the proposed ceasefire deal in Ukraine, as US officials head to Russia for negotiations.

    Russia has yet to publicly endorse an immediate ceasefire, but has indicated that it is reviewing the plan, and a phone call between US President Donald Trump and Russian President Vladimir Putin is on the table.

    However, Trump remains skeptical, stating that while he has received “positive messages” about the ceasefire, such reassurances “mean nothing” without concrete action from Putin.

    Trump also warned that if Putin refuses to sign the deal, the US could take “financially very bad” actions against Russia, likely hinting at severe sanctions.

    Ukrainian President Volodymyr Zelenskyy said earlier in the week that stronger Western financial and military support would follow should the ceasefire negotiations fail.

    Technically, Gold’s near term rebound from 2832.41 extended higher today and focus is now on 2956.09 resistance. Decisive break there will resume the larger up trend to 3000 psychological, and possibly further to 61.8% projection of 2584.24 to 2956.09 from 2832.41 at 3062.21.

    However, break of 2905.80 support should extend the corrective pattern from 2956.09 with another falling leg back to 2832.41 and possibly below.

    USD/JPY Daily Outlook

    Daily Pivots: (S1) 147.51; (P) 148.35; (R1) 149.10; More…

    Intraday bias in USD/JPY remains neutral for the moment, and more consolidations could be seen above 146.52. Upside of recovery should be limited by 150.92 support turned resistance. On the downside, sustained trading below 61.8% retracement of 139.57 to 158.86 at 146.32 will pave the way to 139.57 support.

    In the bigger picture, price actions from 161.94 are seen as a corrective pattern to rise from 102.58 (2021 low), with fall from 158.86 as the third leg. Strong support should be seen from 38.2% retracement of 102.58 to 161.94 at 139.26 to bring rebound. However, sustained break of 139.26 would open up deeper medium term decline to 61.8% retracement at 125.25.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    00:00 AUD Consumer Inflation Expectations Mar 3.60% 4.60%
    00:01 GBP RICS Housing Price Balance Feb 11% 20% 22%
    07:30 CHF Producer and Import Prices M/M Feb 0.20% 0.10%
    07:30 CHF Producer and Import Prices Y/Y Feb -0.30%
    10:00 EUR Eurozone Industrial Production M/M Jan 0.80% -1.10%
    12:30 USD Initial Jobless Claims (Mar 7) 224K 221K
    12:30 CAD Building Permits M/M Jan -4.80% 11.00%
    12:30 USD PPI M/M Feb 0.30% 0.40%
    12:30 USD PPI Y/Y Feb 3.30% 3.50%
    12:30 USD PPI Core M/M Feb 0.30% 0.30%
    12:30 USD PPI Core Y/Y Feb 3.60% 3.60%
    14:30 USD Natural Gas Storage -46B -80B

     



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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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  • A Multi-Decade Trend Reversal Underway in EUR/USD?

    A Multi-Decade Trend Reversal Underway in EUR/USD?


    The sharp contrast between Europe’s newfound unity and the ongoing tariff chaos in the US has been a defining theme in the financial markets. Euro’s extraordinary strength last week reflected growing investor confidence in the region’s strategic shift toward fiscal expansion and defense spending. From the formation of the “Coalition of the Willing” to the ReArm Europe initiative, they highlighted a strong, coordinated response to challenges, be it geopolitical or economic. That could set the stage for a long-term structural shift in European markets.

    Meanwhile, the US continued to grapple with trade policy uncertainty, with tariffs now more seen as a drag on sentiment and economic growth rather than a source of inflationary pressure. The recent exemptions granted to Canada and Mexico only reinforced the perception of inconsistency in Washington’s trade strategy. The lack of clarity on future policy moves has started to weigh on investor sentiment. That, if persists, could lead to a outflow of capital from the US and weakening the Dollar further.

    From a technical points of view, EUR/USD has shown clear signs of a potential long-term bullish reversal. The pair’s strong surge last week suggests that the multi-year downtrend may have bottomed out, with further upside potential if Europe successfully executes its ambitious fiscal and defense spending plans. However, challenges remain, including implementation risks and the broader impact of trade tensions on European exports.

    Currency market performance last week reflected the shifting sentiment. Euro ended as the strongest performer, followed by Sterling and Swiss Franc, which also benefited from Europe’s renewed economic confidence.

    On the other hand, Dollar closed as the worst performer, struggling under the weight of investor skepticism and diminishing safe-haven appeal. Elsewhere, Canadian Dollar and Australian Dollar also underperformed, indicating that risk-off sentiment remains present, particularly in the US. Yen and Kiwi positioned themselves in the middle of the performance spectrum.

    Europe’s Bold Shift Ignites Market Optimism

    Last week brought a seismic shift in Europe’s geopolitical, defense, and fiscal policies. In a move not seen in decades, the region is asserting greater strategic independence while ramping up economic stimulus. The changes were embraced by investors with enthusiasm, fueling rallies in European assets, particularly in Euro and German equities.

    Euro surged 4.4% against Dollar, its best weekly performance since 2009. Meanwhile, Germany’s 10-year yield posted its biggest jump since the fall of the Berlin Wall. DAX hit fresh record highs, with cyclical and defense-related stocks leading the charge.

    At the heart of this shift is the “ReArm Europe” initiative, which commits the EU to a significant defense buildup. European Commission President Ursula von der Leyen has proposed mechanisms to mobilize up to EUR 800B in special funds. This landmark decision not only strengthens military readiness, but also reduces reliance on external allies.

    Further reinforcing this new direction, EU leaders took a bold stand against Hungarian Prime Minister Viktor Orbán, overriding his veto on aid to Ukraine. In an unusual move, member states issued a separate statement reaffirming their unified support for Kyiv.

    Meanwhile, in Germany, despite ongoing coalition talks, CDU leader Friedrich Merz wasted no time aligning with the SPD to push for loosening of the “debt brake”, which would unlock EUR 500B for infrastructure projects. Additionally, defense spending above 1% of GDP will be permanently exempt from fiscal constraints. Over the next decade, these measures could increase government spending by a staggering 20% of GDP. The scale surpasses even that seen after German reunification in the 1990s.

    This massive fiscal shift in Germany carries significant upside potential for both domestic and Eurozone growth. With a sharp boost in public spending, it could also act as a buffer against potential US tariffs. For years, European growth has been held back by fiscal conservatism—but now, these bold new policies could reshape the region’s economic future for years to come.

    Technically, DAX might be rebuilding upside momentum as seen in D MACD. Current up trend should head to take on 161.8% projection of 14630.21 to 18892.92 from 17024.82 at 23921.87. Decisive break there would target 200% projection at 25550.22 next. Nevertheless, firm break of 22226.34 support will suggest DAX has topped for the near term at least, and consolidations should follow first.

    Is Euro Entering a Long-Term Bull Cycle?

    As Europe embarks on a new era of fiscal expansion and policy coordination, Euro’s looks well-positioned for a prolonged rally and with prospects of long term bullish trend reversal.

    Another key factor supporting Euro is the growing belief that ECB is nearing a pause in its policy easing cycle. With monetary policy now “meaningfully less restrictive”, as described by President Christine Lagarde, a pause could start as soon as in April. ECB could opt for a wait-and-see approach, to assess how trade policy, fiscal initiatives, and broader geopolitical risks play out.

    However, key risks remain, including escalation in trade disputes with the US, as well as how effectively Europe executes its ambitious spending plans. The coming months will be crucial in determining whether this historic shift translates into sustained economic momentum or if internal and external headwinds slow down the Euro’s resurgence.

    Technically, EUR/USD’s strong rally suggests that fall from 1.1274 (2023 high) has completed as a correction, with three waves down to 1.0176. Firm break of 1.1274 would resume larger rally from 0.9534 (2022 low), to 100% projection of 0.9534 to 1.1274 from 1.0176 at 1.1916.

    More significantly, if the bullish case is realized, that would push EUR/USD through the two-decade falling channel resistance, which could be an important sign of long term trend reversal.

    US Stocks at Risk of Bearish Trend Reversal Amid Tariff Chaos

    US stocks endured a turbulent week as investors wrestled with the unpredictable nature of President Donald Trump’s trade policies. The volatility has taken a clear toll on market sentiment, with technical indicators increasingly pointing to bearish trend reversal in major indexes. The coming weeks could prove decisive in determining whether the strong uptrend that has defined the past few months has reversed or if equities can regain their footing.

    S&P 500 logged its worst week since September, falling -3.1%, while DOW dropped -2.4%. NASDAQ was hit hardest, tumbling -3.5%.

    The implementation of 25% tariffs on Canadian and Mexican imports on March 4, had initially sent markets into a tailspin. However, Trump’s decision on Thursday to pause tariffs on USMCA-covered goods for another month only added to the confusion, as investors struggled to decipher the long-term direction of trade policy.

    This chaotic cycle of tariff imposition followed by temporary reversals has created an uncertain and fragile investment environment. Businesses remain hesitant to make forward-looking decisions, while consumer confidence is showing signs of strain. The erratic nature of US trade policy has left markets with little clarity, and the risk of further deterioration in sentiment remains high.

    Nevertheless, Friday’s non-farm payroll report provided some relief, as job growth remained near its recent average, unemployment stayed within its recent range, and wage growth held robust. The data suggested that, at least for now, the feared economic fallout from tariffs has not yet materialized in a meaningful way. However, lingering uncertainty around trade and global economic conditions continues to weigh on sentiment.

    Meanwhile, Fed Chair Jerome Powell reiterated on Friday that the central bank is in no rush to cut rates, stating that the Fed is “well-positioned to wait for clarity.” Powell’s cautious stance contrasts with growing market expectations for rate cuts, as investors bet on economic weakness forcing the Fed’s hand.

    While a hold in March remains the base case, with 88% odds, Fed fund futures now price in a 52% probability of a 25bps rate cut in May, up sharply from 33% a week ago and 26% a month ago. This suggests that investors are bracing for the possibility of further economic softening, with Fed being forced to act sooner than its current guidance suggests.

    Technically, DOW’s up trend should still be intact as long as 41844.89 support holds. However, firm break there will argues that it’s already in correction to the up trend from 28660.93 (2022 low). Sustained trading below 55 W EMA (now at 41332.86) will further solidify this bearish case. Next target will be 38.2% retracement of 28660.94 to 45087.75 at 38812.71.

    As for NASDAQ, it’s now pressing 55 W EMA (at 17878.67). Sustained break there will also indicate that it’s already correcting the up trend from 10088.82 (2022 low). Next target is 38.2% retracement of 10088.82 to 20204.58 at 16340.36.

    As for Dollar Index, last week’s steep decline and strong break of 55 W EMA (now at 105.31) argues that corrective pattern from 99.57 (2023 low) has completed with three waves up to 110.17. Near term risk will now stay on the downside as long as 55 D EMA (now at 106.91) holds. Further downside acceleration will raise the chance that Dollar Index is indeed resuming the whole down trend from 114.77 (2022 high) .

    While it’s still too early to confirm the bearish case, firm break of 100.15 support could set up further medium term fall to 100% projection of 114.77 to 99.57 from 110.17 at 94.97.

    The challenge for Dollar is that risk aversion no longer seems to be offering support. Tariffs are providing little help unlike what it did this year. Meanwhile, Fed appears poised to resume rate cuts sooner than expected. With these factors in play, it’s unclear what could drive a rebound for the greenback, other then implosion of Euro and other currencies

    EUR/CHF Weekly Outlook

    EUR/CHF surged to as high as 0.9634 last week but faced strong resistance from long term falling channel and retreated. Initial bias stays neutral this week first and some more consolidations could be seen. Further rally will be expected as long as 55 4H EMA (now at 0.9467) holds. On the upside, above 0.9634, and sustained trading above 0.9651 fibonacci level will pave the way back to 0.9928 key resistance next.

    In the bigger picture, the strong break of 55 W EMA (now at 0.9482) is a medium term bullish sign. Sustained break trading above long-term falling channel resistance (at around 0.9620) would suggest that the downtrend from 1.2004 (2018 high) has bottomed at 0.9204. Stronger rally should then be see to 0.9928 key resistance at least.

    In the long term picture, bullish signs are emerging. However, the important hurdle at 0.9928 resistance, which is close to 55 M EMA (now at 0.9960), is needed to be taken out decisively before considering long term trend reversal. Otherwise, outlook is neutral at best.



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  • Risk Aversion Creeps Back as Markets Unconvinced by Trump’s Temporary Tariff Exemptions

    Risk Aversion Creeps Back as Markets Unconvinced by Trump’s Temporary Tariff Exemptions


    Risk sentiment in the forex markets appears to be tilting towards risk aversion in Asian trading, marking a shift from the broad Dollar selloff earlier in the week. Overnight, US President Donald Trump granted temporary tariff exemptions for Canadian and Mexican goods under the USMCA, delaying a full-scale implementation until April 2. While this provided some relief for Canadian Dollar, overall market sentiment remained fragile, with major US equity indexes closing in the red, led by losses in NASDAQ.

    The temporary exemption covers roughly 50% of Mexican imports and 38% of Canadian imports. However, Trump’s move has done little to inspire confidence, as markets remain skeptical about his erratic trade policies. Investors have become wary of his inconsistent messaging—one day insisting on strict tariff enforcement, the next day granting exemptions. This unpredictability has left traders cautious, unsure of how to position for potential future shifts in trade policy.

    Despite the tariff delay, risk-sensitive currencies like Australian and New Zealand Dollars have come under renewed selling pressure in Asia. The broader market focus has shifted toward the April 2 deadline, when Trump’s proposed “reciprocal tariffs” are set to take effect. These tariffs will target foreign nations that impose import taxes on US goods, keeping trade war fears firmly in play.

    Adding to market unease is the upcoming US non-farm payrolls report. With sentiment already on shaky ground, any significant weakness in the jobs data could deepen risk aversion. While a weaker NFP might increase expectations for a Fed rate cut, traders are growing concerned that deteriorating labor market conditions could signal a sharper economic slowdown. This dynamic suggests that even rising Fed cut bets may not be enough to offset broader recession fears.

    So far for the week, Dollar remains the worst-performing currency, struggling to find any solid footing. Canadian Dollar follows closely as the second weakest, alongside Australian Dollar. On the stronger side, Euro continues to outperform, driven by optimism over fiscal expansion plans in Europe. Sterling and Swiss Franc are also holding firm, while Yen and Kiwi are settling in the middle.

    In Asia, the time of writing, Nikkei is down -2.07%. Hong Kong HSI is down -0.06%. China Shanghai SSE is up 0.15%. Singapore Strait Times is down -0.01%. Japan 10-year JGB yield is up 0.023 at 1.535. Overnight, DOW fell -0.99%. S&P 500 fell -1.78%. NASDAQ fell -2.61%. 10-year yield rose 0.021 to 4.286.

    NFP in focus: NASDAQ and S&P 500 at risk of deeper correction

    US markets are standing on precarious footing, with investors attention on the February non-farm payrolls report due later in the day. There has been noticeable anxieties surrounding the impact of fiscal and trade policies changes. A set of weaker-than-expected NFP data could be taken as another signal of swift deceleration in the economy and rattle market sentiment further.

    Cooldown in the job market might prompt Fed to resume rate cuts earlier. Markets are currently pricing in 53% chance of a 25bps rate cut in March, reflecting growing belief that Fed will need to act sooner rather than later. However, the immediate market response to downside surprises may not be relief over monetary easing but rather heightened concerns about the pace of economic weakening, given recent policy uncertainties and trade disruptions.

    Markets anticipate 156k increase in NFP for February, up from 143k in January. The unemployment rate is forecast to remain at 4.0%, while average hourly earnings should hold steady at 0.3% m/m.

    The latest indicators paint a mixed picture: ISM Manufacturing PMI Employment subindex dropped to 47.6 from 50.3, while ISM Services PMI Employment inched up to 53.9 from 52.3. Meanwhile, ADP Employment reading of 77k missed last month’s 186k, and the 4-week moving average of jobless claims rose to 224k—its highest level so far this year.

    Technically, NASDAQ has been sliding for two consecutive weeks, now testing its 55-week EMA at 17,874.13. A decisive break below this level would confirm that the index is at least in a correction relative to the broader uptrend from the 10,088.82 low in 2022. The next key support to watch is the 38.2% Fibonacci retracement of 10,088.82 to 20,204.58, which comes in at 16,340.36. Extended losses here could set a negative tone for broader U.S. equities.

    The S&P 500, still trading comfortably above its 55-week EMA at 5,590.31, may follow in the NASDAQ’s footsteps if sentiment sours further. Should the index breach this EMA convincingly, it would likely confirm that the fall from 6,147.43 is a correction of the uptrend from the 3,491.58 low in 2022. This scenario would set a 38.2% retracement target around 5,132.89, marking a significant downside pivot.

    Overall, whether today’s NFP meets, misses, or exceeds expectations, the market’s reaction will hinge on how investors interpret the labor data in the context of looming trade uncertainties and weakening growth momentum. A softer reading could drive near-term Fed cut bets higher but might also deepen concerns that the U.S. economy is losing steam, thereby raising the stakes for traders and policymakers alike.

    Technically, NASDAQ is now eyeing 55 W EMA (now at 17874.13) with the extended decline in the past two weeks. Sustained break there will confirm that it’s at least in correction to the up trend from 10088.82 (2022 low). Next target will be 38.2% retracement of 10088.82 to 20204.58 at 16340.36.

    Extended selloff in NASDAQ could be a prelude to the similar development in S&P 500. While it’s still well above 55 W EMA (now at 5590.31), sustained break there will align the outlook with NASDAQ. Fall from 6147.43 would then be correcting the up trend from 3491.58 (2022 low) at least, and target 38.2% retracement of 3491.58 to 6147.43 at 5132.89.

    Fed’s Waller: No immediate rate cut, but open to future easing

    Fed Governor Christopher Waller suggested that another rate cut at the next FOMC meeting is unlikely, but he remains open to further easing down the line.

    “I would’t say at the next meeting, but could certainly see [cuts] going forward,” he noted. Waller particularly highlighted the February inflation report and the evolving impact of trade policies as key factors in shaping the Fed’s outlook.

    Waller acknowledged the challenges in assessing the economic effects of tariffs, citing changing economic conditions and President Trump’s harder trade stance as factors complicating policy decisions.

    He noted that evaluating the impact of tariffs is more difficult this time, adding, “It’s very hard to eat a 25% tariff out of the profit margins.”

    Fed’s Bostic: Economy in flux, no rush to adjust policy

    Atlanta Fed President Raphael Bostic emphasized the high level of uncertainty in the US economy due to evolving policies under the Trump administration. With inflation, trade policies, and government spending all in flux, he suggested that meaningful clarity may not emerge until “late spring or summer”. Given this, he reiterated “We’ll have to just sort of really be patient.”

    Speaking overnight, he described the situation as being in “incredible flux,” with rapid shifts in trade and fiscal policies making it difficult to predict economic trends. Given this backdrop, Bostic urged caution, stating, “You’ve got to be patient and not want to get too far ahead.”

    He noted that just this week, there have been significant swings in expectations regarding economic policy. “If I was waiting before to see and get a clear signal about where the economy is going to go, I’m definitely waiting now,” he said.

    BoE’s Mann: Larger rate cuts needed as global spillovers worsen

    BoE MPC member Catherine Mann argued that recent monetary policy actions have been overshadowed by “international spillovers.” Financial market volatility, particularly from cross-border shocks, has disrupted traditional policy signals, making “founding premise for a gradualist approach to monetary policy is no longer valid”.

    Mann said that larger rate cuts, like the 50bps reduction she supported at the last BoE meeting, would better “cut through this turbulence” and provide clearer guidance to the economy.

    She believes that a more decisive policy stance would help steer inflation expectations and stabilize economic conditions, rather than allowing uncertainty to linger with smaller, incremental moves.

    Despite her stance, the BoE opted for a smaller 25bps rate cut in its latest decision, with Mann and dovish member Swati Dhingra being outvoted 7-2.

    China’s exports rise 2.3% yoy, imports fall -8.4% yoy

    China’s exports rose just 2.3% yoy to USD 539.9B in the January–February period, coming in below forecasts of 5.0% yoy and down sharply from December’s 10.7% yoy.

    Meanwhile, imports sank -8.4% yoy to USD 369.4B, missing expectations of 1.0% yoy growth and marking a noticeable drop from December’s 1.0% yoy.

    As a result, trade balance resulted in USD 170.5B surplus exceeding projections of USD 147.5B.

    Looking ahead

    Germany factory orders, Swiss foreign currency reserves and Eurozone GDP revision will be released in European session. Later in the day, Canada employment will also be published alongside US NFP.

    USD/CHF Daily Outlook

    Daily Pivots: (S1) 0.8800; (P) 0.8863; (R1) 0.8900; More…

    Intraday bias in USD/CHF remains on the downside for the moment. Rise from 0.8374 should have completed at 0.9222, after rejection by 0.9223 key resistance. Deeper fall should be seen to 61.8% retracement of 0.8374 to 0.9200 at 0.8690 next. On the upside, above 0.8924 minor resistance will turn intraday bias neutral first. But rise will now stay on the downside as long as 0.9035 resistance holds, in case of recovery.

    In the bigger picture, rejection by 0.9223 key resistance keep medium term outlook bearish. That is, larger fall from 1.0342 (2017 high) is not completed yet. Firm break of 0.8332 (2023 low) will confirm down trend resumption.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    03:02 CNY Trade Balance (USD) Feb 170.5B 147.5B 104.8B
    07:00 EUR Germany Factory Orders M/M Jan -2.40% 6.90%
    07:45 EUR France Trade Balance (EUR) Jan -4.1B -3.9B
    08:00 CHF Foreign Currency Reserves (CHF) Feb 736B
    10:00 EUR Eurozone GDP Q/Q Q4 0.10% 0.10%
    13:30 CAD Net Change in Employment Feb 17.8K 76K
    13:30 CAD Unemployment Rate Feb 6.70% 6.60%
    13:30 CAD Capacity Utilization Q4 79.00% 79.30%
    13:30 USD Nonfarm Payrolls Feb 156K 143K
    13:30 USD Unemployment Rate Feb 4% 4%
    13:30 USD Average Hourly Earnings M/M Feb 0.30% 0.50%

     



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  • Tariff Pause for Automakers Soothes Markets, Euro Stands Tall Ahead of ECB Cut

    Tariff Pause for Automakers Soothes Markets, Euro Stands Tall Ahead of ECB Cut


    Risk sentiment is mildly positive in Asian session today, as investors digest the latest developments in US trade policy and Chinese economic measures. Markets welcomed the news that the US has granted a one-month exemption for imports from Mexico and Canada for auto makers. The decision came after US President Donald Trump met with executives from Ford, General Motors, and Stellantis, who urged him to delay the levies to avoid disruptions in the industry.

    Meanwhile, Hong Kong stocks surged to a three-month high, with optimism fueled by hints from China’s National People’s Congress about looser monetary policies, along with expectations for further stimulus. Adding to the bullish momentum, tech giant Alibaba saw its stock soar after unveiling a new AI model, which it claims is competitive with DeepSeek, a major player in the artificial intelligence race. The rally in Chinese markets is adding to overall risk appetite in Asia, though uncertainties remain around US-China trade tensions.

    In the currency markets, Euro continues to lead gains for the week as investors anticipate today’s ECB policy decision. The central bank is widely expected to deliver a 25-basis-point rate cut, but the outlook for further easing is more uncertain than ever. A trade war with the US is adding downside risks to growth, while Europe’s major economies are making historic shifts in fiscal policy, particularly in Germany, where new spending initiatives could support economic expansion. These conflicting factors make it challenging to predict ECB’s path beyond today’s meeting.

    ECB President Christine Lagarde’s press conference is unlikely to provide strong forward guidance, as policymakers will want to maintain flexibility amid rising geopolitical and trade uncertainties. However, despite the upcoming rate cut, Euro’s rally looks well-supported in the near term, particularly as markets focus on Europe’s growing fiscal momentum and rearmament plans.

    Sterling is the second strongest performer, followed by New Zealand Dollar. In contrast, Dollar remains at the bottom of the performance ladder, looking increasingly vulnerable ahead of tomorrow’s Non-Farm Payrolls report. Canadian Dollar is the second-worst performer of the week and Japanese Yen is also under pressure. Swiss Franc and Australian Dollar are positioned in the middle of the pack.

    In Asia, at the time of writing, Nikkei is up 0.82%. Hong Kong HSI is up 3.03%. China Shanghai SSE is up 0.78%. Singapore Strait Times is up 0.72%. Japan 10-year JGB yield is up 0.053 at 1.499, hitting a 16-year high. Overnight, DOW rose 1.14%. S&P 500 rose 1.12%. NASDAQ rose 1.46%. 10-year yield rose 0.055 to 4.265.

    ECB to cut rates, but trade war and fiscal shifts cloud outlook

    ECB is widely expected to continue its “regular, gradual” easing cycle today, reducing the deposit rate by 25bps to 2.50%. Markets are still pricing in two more cuts this year, but the path forward has become murkier in light of recent geopolitical and economic shifts. Also, interest rates are approaching neutral levels, making further easing a more delicate decision.

    On one hand, trade tensions with the US loom large, and the fallout from fresh tariffs and retaliatory measures could weigh on Eurozone’s already fragile economic recovery. On the other hand, the announcement of transformational fiscal changes in both Germany and at the European Commission level—aimed at boosting defense and infrastructure spending—could have a significant long-term impact on growth, partially offsetting the headwinds from a trade war.

    ECB’s new economic projections, to be released alongside today’s decision, are expected to show weaker growth and marginally higher inflation. However, data collection for these forecasts took place weeks ago, rendering them less reflective of the rapidly evolving environment. Thus, their usefulness for predicting medium-term policy moves may be limited, with markets keeping an even closer eye on the ECB’s forward guidance instead.

    Euro has been exceptionally strong this week, with recent optimism boosted by developments in European fiscal policy. It’s rally is unlikely to be deter by today’s ECB outcome.

    Technically, EUR/CHF has surged aggressively, now pressing long-term falling channel resistance (at around 0.9620), after decisively breaking above 55 W EMA. Sustained break above this resistance would suggest that the downtrend from 1.2004 (2018 high) has finally bottomed at 0.9204.

    Sustained trading above the channel resistance will be argue that whole down trend from 1.2004 (2018 high) has completed at 0.9204, on bullish convergence condition in W MACD.

    In this bullish case, further rise should be seen to 0.9928 structural resistance at least, with prospect of stronger rally, even still as a medium term corrective move.

    Fed’s Beige Book: Modest growth, rising price pressures, and tariff concerns

    Fed’s Beige Book report indicated that “economic activity rose slightly” since mid-January, with mixed regional performances. While four Districts saw modest or moderate growth, six reported no change, and two experienced slight contractions.

    Consumer spending was generally lower, with essential goods seeing steady demand but discretionary spending weakening, particularly among lower-income consumers. However, business expectations remained “slightly optimistic” for the coming months.

    On the labor front, employment “nudged slightly higher” overall, though wage growth slowed modestly compared to the previous report.

    While price pressures remained moderate, several Districts noted an uptick in the pace of increase, particularly in manufacturing and construction. Many firms struggled to pass higher input costs onto customers, but expectations of tariffs on imports were already prompting preemptive price hikes in some sectors.

    On the data front

    Swiss unemployment rate, UK PMI construction and Eurozone retail sales will be released in European session. Later in the day, Canada will release trade balance and Ivey PMI. US will publish jobless claims, trade balance, and non-farm productivity.

    EUR/USD Daily Outlook

    Daily Pivots: (S1) 1.0662; (P) 1.0729; (R1) 1.0857; More…

    Intraday bias in EUR/USD remains on the upside as current rally from 1.0176 is still in progress. Next target is 161.8% projection of 1.0176 to 1.0531 from 1.0358 at 1.0932 On the downside, below 1.0721 minor support will turn intraday bias neutral and bring consolidations first, before staging another rise.

    In the bigger picture, the strong break of 55 W EMA (now at 1.0668) suggests that fall from 1.1274 (2024 high) has completed as a three wave correction to 1.0176. That came after drawing support from 0.9534 (2022 low) to 1.1274 at 1.0199. Rise from 0.9534 is still intact, and might be ready to resume through 1.1274. 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
    00:30 AUD Building Permits M/M Jan 6.30% -0.10% 0.70% 1.70%
    00:30 AUD Trade Balance (AUD) Jan 5.62B 5.68B 5.09B 4.92B
    06:45 CHF Unemployment Rate Feb 2.70% 2.70%
    09:30 GBP Construction PMI Feb 49.8 48.1
    10:00 EUR Eurozone Retail Sales M/M Jan 0.10% -0.20%
    12:30 USD Challenger Job Cuts Y/Y Feb -39.50%
    13:15 EUR ECB Deposit Rate 2.50% 2.75%
    13:15 EUR ECB Main Refinancing Rate 2.65% 2.90%
    13:30 CAD Trade Balance (CAD) Jan 1.4B 0.7B
    13:30 USD Initial Jobless Claims (Feb 28) 236K 242K
    13:30 USD Trade Balance (USD) Jan -93.1B -98.4B
    13:30 USD Nonfarm Productivity Q4 1.20% 1.20%
    13:30 USD Unit Labor Costs Q4 3% 3%
    13:45 EUR ECB Press Conference
    15:00 USD Wholesale Inventories Jan F 0.70% 0.70%
    15:00 CAD Ivey PMI Feb 50.6 47.1
    15:30 USD Natural Gas Storage -96B -261B

     



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  • Euro and DAX Surge on German Spending Boost, Dollar Struggle Continues after Poor ADP

    Euro and DAX Surge on German Spending Boost, Dollar Struggle Continues after Poor ADP


    Investor sentiment in Europe is exceptionally upbeat today, with German stocks leading the rally as DAX surges over 3%, breaking above the 23k mark. Euro also rallies across the board with solid momentum, with help from rise in Germany’s benchmark yield, the overall positive sentiment, as well as a struggling Dollar.

    The boost to European sentiment was driven by the announcement that Germany’s two biggest parties, CDU/CSU and SPD, have agreed to overhaul borrowing rules to expand defense and infrastructure spending. More importantly, they are accelerating these investment plans rather than waiting out a lengthy coalition-building process. This commitment to boosting government spending is seen as a significant stimulus for the German economy, which has been struggling with recession.

    The prospect of higher public investment in Europe stands in stark contrast to the growing uncertainty surrounding the US economy. The latest ADP jobs report significantly missed expectations. The report cited policy uncertainty and slowing consumer spending as key factors behind the hiring slowdown. Focuses are now on Friday’s non-farm payrolls report, which could further cement concerns over a softening U.S. labor market.

    At the same time, the tariff situation remains highly fluid, with reports indicating that the Trump administration is considering exemptions for Canadian and Mexican products that comply with USMCA trade rules. However, no official confirmation has been made, leaving uncertainty over trade policy still hanging over the markets.

    In the currency markets, Euro is leading the pack as the strongest performer of the day, followed by Japanese Yen and New Zealand Dollar. Dollar remains the weakest, with Canadian Dollar also underperforming, followed by Swiss Franc. British Pound and Australian Dollar are positioned in the middle of the pack.

    Technically, an immediate focus is on 0.9516 resistance in EUR/CHF. Firm break above this level would confirm resumption of rebound from 0.9204. More significantly, it would also strengthen the case that the downtrend from 0.9928 (2024 high) is reversing. In this case, EUR/CHF should target 100% projection of 0.8204 to 0.9516 from 0.9331 at 0.9643 next.

    In Europe, at the time of writing, FTSE is up 0.37%. DAX is up 3.42%. CAC is up 2.05%. UK 10-year yield is up 0.118 at 4.619. Germany 10-year yield is up 0.219 at 2.713. Earlier in Asia, Nikkei rose 0.23%. Hong Kong HSI rose 2.84%. China Shanghai SSE rose 0.53%. Singapore Strait Times rose 0.20%. Japan 10-year JGB yield rose 0.020 to 1.446.

    US ADP jobs grow only 77, hiring slowdown

    US private sector employment growth slowed sharply in February, with ADP reporting an increase of just 77k jobs, far below market expectations of 140k.

    The breakdown showed that goods-producing sectors contributed 42k jobs, while service-providing sectors added only 36k. By company size, small businesses shed -12k jobs, while medium-sized firms led hiring with a 46k gain, followed by large businesses with a 37k increase.

    Wage growth showed little change, with job-changers seeing annual pay gains slow slightly from 6.8% to 6.7%, while job-stayers remained steady at 4.7%.

    ADP’s chief economist Nela Richardson attributed the hiring slowdown to “policy uncertainty and a slowdown in consumer spending,” which may have prompted layoffs or cautious hiring.

    Eurozone PPI up 0.8% mom 1.8% yoy in Jan, above expectations.

    Eurozone producer prices rose sharply by 0.8% mom and 1.8% yoy in January, exceeding expectations of 0.3% mom and 1.4% yoy, respectively.

    The monthly increase in Eurozone PPI was primarily driven by a 1.7% mom jump in energy prices, while capital goods and durable consumer goods also saw notable gains of 0.7% mom and 0.6%, respectively. Intermediate goods prices edged up by 0.3% mom, while non-durable consumer goods saw a modest 0.2% mom rise.

    The broader EU also recorded a 0.8% mom, 1.8% yoy in producer prices. Among individual member states, Ireland saw the largest monthly price jump at 6.2%, followed by Bulgaria (+5.4%) and Sweden (+2.3%).

    However, not all countries experienced inflationary pressures, as Portugal (-2.2%), Austria (-0.6%), Slovenia (-0.5%), and Cyprus (-0.3%) registered price declines.

    Eurozone PMI composite finalized at 50.2, barely grow for two months

    Eurozone economy showed little momentum in February, with PMI Services finalizing at 50.6, down from 51.3 in January, while PMI Composite was unchanged at 50.2.

    The picture was mixed across the region with Spain, Ireland, and Italy showing signs of expansion, while Germany’s services sector slowed and France’s continued its sharp contraction, posting its lowest reading in 13 months at 45.1.

    Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, noted that services growth is barely offsetting the prolonged slump in manufacturing. He pointed to rising input costs, particularly wage pressures, as a growing concern for ECB.

    Political uncertainty in key economies is also weighing on sentiment. France’s services sector is deteriorating at a much faster pace, likely influenced by unresolved political instability. In contrast, Germany’s services sector, though slowing, remains in expansion, with hopes that post-election stability could support economic recovery.

    However, with external risks from trade tensions and weak consumer spending, a decisive rebound in Eurozone remains uncertain.

    UK PMI services finalized at 51, stagflation risks grow

    The UK services sector showed little improvement in February, with PMI Services finalized at 51.0, slightly up from January’s 50.8 but still well below its long-run average of 54.3. Meanwhile, PMI Composite edged lower from 50.6 to 50.5, signaling stagnant overall economic activity as demand conditions continue to weaken both domestically and in export markets.

    Tim Moore, Economics Director at S&P Global Market Intelligence, warned of “elevated risk of stagflation on the horizon”. New orders falling at their sharpest rate in over two years. Rising payroll costs and economic uncertainty have eroded business confidence, bringing sentiment to its lowest level since December 2022.

    Concerns over slowing growth and persistent inflation pressures have also led to continued job losses, with employment in the services sector contracting for a fifth straight month—the longest period of decline outside of the pandemic since early 2011.

    Swiss annual CPI ticks down to 0.3% yoy, remains weak

    Swiss inflation accelerated on a monthly basis in February, with CPI rising 0.6% mom, slightly above the expected 0.5%. Core CPI, which excludes fresh and seasonal products, energy, and fuel, increased by 0.7% mom. The rise was driven by both domestic and imported product prices, which climbed 0.5% mom and 0.9% mom, respectively.

    However, the broader inflation trend remains subdued. On a year-over-year basis, headline CPI slowed to 0.3% yoy from 0.4% yoy, though it was still slightly above expectations of 0.2% yoy. Core CPI remained steady at 0.9% yoy. While domestic product price inflation eased from 1.0% yoy to 0.9% yoy, imported prices continued to contract, staying at -1.5% yoy.

    BoJ’s Uchida: Interest rate to gradually approach neutral by late FY 2025 to FY 2026

    BoJ Deputy Governor Shinichi Uchida reinforced today that interest rates will continue to rise if the bank’s economic projections hold. He highlighted in a speech that BoJ expects inflation to stabilize around the 2% target in the second half of fiscal 2025 to fiscal 2026, with “effects of the cost-push wane” while underlying inflation strengthens with wages growth.

    “The policy interest rate at that time is considered to approach an interest rate level that is neutral to economic activity and prices,” he added.

    However, Uchida acknowledged that determining the “neutral” interest rate level remains uncertain. While in theory, it should be around 2% plus Japan’s natural rate of interest, estimates for the latter vary significantly from -1% to +0.5%.

    Given this wide range and estimation errors, BoJ will avoid relying solely on theoretical models and instead “examine the response of economic activity and prices as it raises the policy interest rate”

    Japan’s PMI service finalized at 53.7, sector strengthens but confidence wanes on labor shortages and trade risks

    Japan’s PMI Services was finalized at 53.7 in February, up from January’s 53.0, marking a six-month high. PMI Composite also improved from 51.1 to 52.0, the strongest reading since September 2024.

    According to Usamah Bhatti, Economist at S&P Global Market Intelligence, service sector businesses saw higher sales volumes, with export demand contributing to the expansion. Meanwhile, the broader private sector recorded its steepest rise in activity in five months, supported by a milder contraction in manufacturing.

    Despite the growth, overall business confidence showed signs of softening. Bhatti noted Firms expressed concerns over labor shortages and uncertainty stemming from US trade policies, leading to the weakest sentiment since January 2021.

    RBA’s Hauser: Uncertain on further easing disputes market’s rate-cut outlook

    RBA Deputy Governor Andrew Hauser emphasized in a speech today that monetary policy is set to ensure inflation returns to the midpoint of the target range, which is crucial for maintaining price stability over the long run.

    He justified the February rate cut, stating that it “reduces the risks of inflation undershooting that midpoint.”

    However, Hauser pushed back against market expectations of a sustained easing cycle, saying the “Board does not currently share the market’s confidence that a sequence of further cuts will be required”.

    While Hauser acknowledged that interest rates will go where they need to go to balance inflation control with full employment, he made it clear that progress so far does not warrant complacency.

    He stressed that RBA will continue to assess economic developments on a “meeting by meeting” basis.

    Australia’s GDP grows 0.6% qoq in Q4, ending per capita contraction streak

    Australia’s GDP grew by 0.6% qoq in Q4, exceeding expectations of 0.5% qoq, while annual growth stood at 1.3% yoy. A key highlight was the 0.1% qoq per capita GDP growth, marking the first increase after seven consecutive quarters of contraction.

    According to Katherine Keenan, head of national accounts at the ABS, “Modest growth was seen broadly across the economy this quarter.” She noted that both public and private spending contributed positively, alongside a rise in exports of goods and services.

    China’s Caixin PMI services rises to 5.14, but uncertainties rising in employment and income

    China’s Caixin Services PMI climbed to 51.4 in February, up from 51.0, beating market expectations of 50.8. Composite PMI also improved slightly to 51.5, signaling steady expansion across both manufacturing and services for the 16th consecutive month.

    According to Wang Zhe, Senior Economist at Caixin Insight Group, supply and demand showed improvement in both sectors, supported by robust consumption during the Chinese New Year holiday and technological innovations in select industries. However, “employment saw a slight contraction”, mainly due to weakness in the manufacturing sector.

    Concerns remain over China’s broader economic recovery. Wang noted that overall price levels “remained subdued”, with declining sales prices in both manufacturing and services. “Rising uncertainties in employment and household income constraining efforts to boost domestic demand and stabilize the economy,” he added.

    EUR/USD Mid-Day Outlook

    Daily Pivots: (S1) 1.0522; (P) 1.0575; (R1) 1.0679; More…

    EUR/USD accelerates further higher today and met 100% projection of 1.0176 to 1.0531 from 1.0358 at 1.0173 already. There is no sign of topping yet. Intraday bias stays on the upside for 161.8% projection at 1.0932 next. On the downside, below 1.0636 minor support will turn intraday bias neutral again first.

    In the bigger picture, the strong rebound from 61.8 retracement of 0.9534 (2022 low) to 1.1274 (2024 high) at 1.0199 argues that fall from 1.1274 might be a correction only. Sustained trading above 55 W EMA (now at 1.0668) should indicate that this correction has already completed with three waves down to 1.0176. Rise from 0.9534 (2022 low) might then be ready to resume through 1.1274. Nevertheless, rejection by 55 W EMA would keep outlook bearish for another fall through 1.0176 at a later stage.

    Economic Indicators Update

    GMT CCY EVENTS ACT F/C PP REV
    00:30 AUD GDP Q/Q Q4 0.60% 0.50% 0.30%
    00:30 JPY Services PMI Feb F 53.7 53.1 53.1
    01:45 CNY Caixin Services PMI Feb 51.4 50.8 51
    07:30 CHF CPI M/M Feb 0.60% 0.50% -0.10%
    07:30 CHF CPI Y/Y Feb 0.30% 0.20% 0.40%
    08:50 EUR France Services PMI Feb F 45.3 44.5 44.5
    08:55 EUR Germany Services PMI Feb F 51.1 52.2 52.2
    09:00 EUR Eurozone Services PMI Feb F 50.6 50.7 50.7
    09:30 GBP Services PMI Feb F 51 51.1 51.1
    10:00 EUR Eurozone PPI M/M Jan 0.80% 0.30% 0.40% 0.50%
    10:00 EUR Eurozone PPI Y/Y Jan 1.80% 1.40% 0% 0.10%
    13:15 USD ADP Employment Change Feb 77K 140K 183K 186K
    13:30 CAD Labor Productivity Q/Q Q4 0.60% 0.30% -0.40% 0.10%
    14:45 USD Services PMI Feb F 49.7 49.7
    15:00 USD ISM Services PMI Feb 53 52.8
    15:00 USD Factory Orders M/M Jan 1.50% -0.90%
    15:30 USD Crude Oil Inventories 0.6M -2.3M
    19:00 USD Fed’s Beige Book

     



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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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