Asset classes and major forex pairs were all over the place, as the prospect of more U.S. tariffs kept market watchers on edge.
Gold took advantage of all the uncertainty and hit fresh record highs at the $2,900 levels.
Here are the latest economic updates and headlines you need to know!
Headlines:
- Chinese CPI in January: 0.5% y/y (0.4% forecast, 0.1% previous)
- China’s PPI in January: -2.3% y/y (-2.2% forecast, -2.3% previous)
- Japanese Economy Watchers sentiment index in January: 48.6 (49.7 expected, 49.9 previous)
- Eurozone Sentix investor confidence index in February: -12.7 (-16.4 expected, -17.7 previous)
- U.S. Cleveland Fed inflation expectations in Q1 2025: 3.2% (3.8% previous)
- ECB head Lagarde: Fight against inflation isn’t over, but conditions for a recovery remain in place
- U.S. President Trump announced 25% tariffs on aluminum and steel imports, including Canada’s
- Trump called for Hamas hostages to be freed by Saturday or he would propose canceling the ceasefire
Broad Market Price Action:
Dollar Index, Gold, S&P 500, Oil, U.S. 10-yr Yield, Bitcoin Overlay Chart by TradingView
The big story in the financial markets was gold striking new all-time highs while investors remained wary of additional tariffs threats from U.S. President Trump. The precious metal was off to a running start, along with bitcoin which made it back up to the $97K area, after Trump mentioned imposing 25% tariffs on steel and aluminum imports.
WTI crude oil also started the week in the green, lifted by U.S. sanctions on Iranian oil imports to China, as well as the latter’s retaliatory tariffs on U.S. oil and gas. The energy commodity sustained its upward trajectory throughout the London and U.S. sessions, closing with a 1.89% gain.
U.S. equity futures started off on a positive note, despite global trade jitters, with the S&P 500 extending its climb and closing 0.41% higher for the day. Treasury yields, which were off to a shaky start and even saw a sharp tumble when the Cleveland Fed survey revealed cooling inflation expectations, managed to pull back up to positive territory by session’s end.
FX Market Behavior: U.S. Dollar vs. Majors:
Overlay of USD vs. Major Currencies Chart by TradingView
Dollar price action was a hot mess for the day, as traders took cues mostly from geopolitical headlines and tariffs threats in the absence of top-tier economic data points.
USD gapped higher over the weekend, likely boosted by safe-haven demand, but unwound its gains as Monday’s Asian session went on. A bit of sideways price action followed during the London session, with the exception of USD/JPY which remained mostly elevated, before a weak rally was seen during U.S. market hours.
By day’s end, USD still closed higher against majority of its peers, save for AUD (-0.21%), with USD/JPY holding on to the largest lead (0.40%).
Upcoming Potential Catalysts on the Economic Calendar:
- Chinese new loans and money supply data coming up
- BOE Governor Bailey’s speech at 12:15 pm GMT
- Canada’s building permits at 1:30 pm GMT
- FOMC member Hammack’s speech at 1:50 pm GMT
- Fed Chairperson Powell’s testimony at 3:00 pm GMT
- FOMC members Bowman and Williams to testify at 8:30 pm GMT
There’s not much in terms of top-tier economic reports on the docket for today, but market watchers are likely to keep a close watch on speeches by BOE Governor Bailey and Fed Chairperson Powell, as these central bank heads could drop some clues on future policy moves.
As always, stay on your toes for potential shifts in market sentiment brought about by tariffs headlines as well. Don’t forget to check out our brand new Forex Correlation Calculator when taking any trades!
