It was another light day in terms of top-tier economic releases, but that didn’t stop major asset classes and currencies from chalking up big moves.
Bitcoin carried on with its slump while Treasury yields closed lower for the sixth consecutive session, despite another day in the red for crude oil and U.S. equities.
Here are the latest headlines you need to know:
Headlines:
- Trump says tariffs on Canada & Mexico are ‘going forward’ with more import taxes likely to come
- Australian CPI y/y in Q4 2024: 2.5% (2.6% expected, 2.5% previous)
- Australia’s construction work done q/q in Q4 2024: 0.5% (1.0% expected, 2.0% previous)
- German GfK consumer climate index in February: -24.7 (-21.7 expected, previous reading downgraded to -22.6)
- Swiss UBS economic expectations index down from 17.7 to 3.4 in January
- Chinese CB leading index down 0.2% m/m in January (-0.1% previous)
- U.S. new home sales in January: 657K (679K expected, previous reading upgraded to 734K)
- U.S. EIA crude oil inventories down 2.3M barrels (2.5M gain expected, 4.6M previous increase)
- BOE MPC member Dhingra: Most forces that lifted trade expansion have diminished, higher U.S. tariffs to have inflationary impact on U.K.
- U.S. President Trump reiterated the government needs a balanced budget in a short period of time, called China a ‘competitor’ and postponed tariffs on Canada and Mexico to April 2
Broad Market Price Action:
Dollar Index, Gold, S&P 500, Oil, U.S. 10-yr Yield, Bitcoin Overlay Chart by TradingView
Financial markets presented a mixed picture today with some notable divergences across asset classes. Treasury yields started off strong but soon resumed their downward trajectory, eventually closing lower for the sixth consecutive session.
Despite the lack of top-tier U.S. data points for the day, investors appear to be increasingly concerned about cooling growth prospects, with the mid-tier new home sales report failing to give any reassurance.
Equity markets showed some resilience, with European indices posting solid gains above 1% on improved fiscal confidence in France while U.S. stock futures opened higher led by an advance in tech shares. Still, U.S. indices ended the day mixed, with the Dow closing in the red as the S&P 500 index was mostly unchanged and the Nasdaq caught marginal gains.
In the commodities space, crude oil also initially fought to hold its ground but soon caved to bearish pressure on stronger optimism about a Russia-Ukraine deal bringing more oil in the global markets. The commodity barely bounced on the surprise decline in EIA inventories pointing to sustained demand.
Bitcoin found itself deeper in the red, as negative sentiment in the crypto sector from earlier in the week lingered and dragged BTC/USD further south to the $84K levels. Gold also retreated from recent highs, down approximately $35 to $2,916, possibly reflecting month-end flows and profit-taking after its strong performance in recent weeks.
FX Market Behavior: U.S. Dollar vs. Majors:
Overlay of USD vs. Major Currencies Chart by TradingView
The dollar traded cautiously stronger across the board today, rebounding in Asia and recovering some ground lost after yesterday’s disappointing U.S. consumer confidence data. Slightly weaker than expected Australian CPI contributed to weaknesses for AUD and NZD early on while JPY appeared to shrug off stronger than expected BOJ core CPI.
Month-end flows appeared to be a factor in today’s forex movements, as the dollar sustained its broad rally during the London session, although European currencies found stronger footing later on likely due a positive showing in equities.
The dollar also unwound most of its gains against the rest of its peers upon seeing a downbeat new home sales figure, but found firmer footing around the time of U.S. President Trump’s press conference during which he outlined his commitment to trade policies and reforming the government budget.
Upcoming Potential Catalysts on the Economic Calendar:
- Swiss GDP at 8:00 am GMT
- Spanish flash CPI at 8:00 am GMT
- ECB Monetary Policy Accounts at 12:30 pm GMT
- U.S. preliminary GDP at 1:30 pm GMT
- U.S. initial jobless claims at 1:30 pm GMT
- U.S. headline and core durable goods orders at 1:30 pm GMT
- U.S. pending home sales at 3:00 pm GMT
- FOMC member Bowman’s speech at 4:45 pm GMT
- FOMC member Hammack’s speech at 6:15 pm GMT
- FOMC member Harker’s speech at 8:15 pm GMT
Dollar traders are likely bracing for the preliminary U.S. GDP report due later today, as major revisions to growth and inflation indicators could strongly influence Fed policy expectations. Don’t forget that a handful of FOMC officials are scheduled to have testimonies afterwards, so their remarks could shape market sentiment as well.
Other potential catalysts to keep an eye out for include the Swiss GDP and ECB meeting minutes, as well as the U.S. initial jobless claims report and durable goods orders data. Be ready for potential month-end flows, too!
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