Important calendar events
The dollar continued to rise after the release of US PPI data on Thursday and the dollar index rose from 103.6 to 103.9. US treasury yields on the other hand dipped, putting pressure on the dollar, with the US 10-year bond yield dropping from 4.31% to 4.27%.
Producer Price Index data on Thursday came in lower than anticipated, boosting the dollar, especially after soft US inflation CPI data released on Wednesday. US PPI remained unchanged in February, after rising by 0.4% in January and against expectations of 0.3% growth. PPI rose by 3.2% year-on-year in February, following a 3.7% increase in January and coming below market expectations of a 3.3% rise. Core PPI, which excludes food and energy, decreased by 0.1% in February against expectations of 0.3% growth, while January’s reading was revised upward to 0.5%. Annual core PPI rose by 3.4% in February, down from 3.8% in January.
US CPI data on Wednesday also showed that US inflation is cooling at a faster pace than anticipated. Headline inflation in the US rose by 2.8% year-on-year in February after rising by 3.0% in January against expectations of a 2.9% print. Monthly inflation rose by just 0.2% in February, after rising by 0.5% in January, against a 0.3% rise anticipated. Core CPI, which excludes food and energy, rose by 0.2% in February, which was significantly lower than January’s reading of 0.4% and fell below expectations of 0.3%. Annual Core CPI rose by 3.1% in February, below the 3.2% estimate, down from 3.3% in January.
US labor data released this week were optimistic, providing support for the dollar. US Unemployment Claims released on Thursday dropped to 220K for the week ending March 8 from 22K the week before, against expectations of a 226K print. JOLTS job openings rose to 7.74M in January from 7.51M in December, exceeding market expectations of 7.65M.
Preliminary GDP data showed that the US economy expanded by 2.3%, following 3.1% expansion in the third quarter of 2024 and falling below market estimates of 2.7% growth. In addition, the US economy expanded by 3.0% in the second quarter of 2024 and by 1.4% in the first quarter.
Markets this week will continue to focus on Trump’s economic policies and trade tariffs, and Trump’s statements are likely to cause volatility in the price of the dollar. On Tuesday, the White House announced a global 25% tariff on global steel and aluminum imports to the US that would take effect on Wednesday. Moreover, Trump announced on his social media that he would impose a double tariff of 50% on aluminum and steel products from Canada. Trump backpedaled on his threats to impose double tariffs on Canada, however, just a few hours later. In return, Canada suspended 25% levies on electricity sent to certain northern US states.
US President Donald Trump has been using threats of imposing trade tariffs as a negotiation tool to further his agenda with other countries. Trump has threatened to impose reciprocal tariffs on many countries, which would raise US import taxes to match those imposed by the country’s other trading partners.
Trump’s tariffs may spark global trade wars and are causing turmoil in markets. Import taxes will raise the price of many products, fueling inflationary pressures. Other nations are likely to reciprocate with tariffs of their own, starting global trade wars, which may lead to economic deterioration and rising inflation in many countries.
Trump’s economic policies are raising concerns that the US economic growth will slow down. Many analysts are already expressing concerns that the US will enter recession. Trump tried to downplay recession risks in an interview with Fox News over the weekend. Trump carefully avoided the word recession, stating instead that the US economy is in a period of transition.
The US Federal Reserve held interest rates steady at its January meeting after delivering three consecutive rate cuts in 2024. FOMC policymakers voted unanimously to maintain the federal funds range to a target range of 4.25% to 4.50%.
The Fed’s latest monetary policy statement did not include an earlier mention that US inflation is moving towards the central bank’s 2% target. Instead, the report stated that price pressures remain elevated, which points to a prolonged pause in rate cuts.
Fed Chair Jerome Powell delivered a mildly hawkish message after the policy meeting, stating that the Fed’s approach will remain data-driven and stressed that the central bank needs to consider potential policy changes under Trump’s administration.
Market odds of rate cuts within the year are on the rise, putting pressure on the dollar and US treasury yields. The Fed is expected to keep interest rates steady in March. Last week, Powell stated that there is no urgent need to cut interest rates, indicating a pause in rate hikes.
Fed rate cut expectations rose after the release of the US inflation report on Wednesday. Markets are currently pricing in three rate cuts in 2025, with the first rate cut in June, compared to just two rate cuts the week before.
The Fed entered its blackout period this week ahead of the monetary policy meeting next week on the 19th. The blackout period prevents FOMC members from commenting on the central bank’s policy rate ahead of a policy meeting.
EUR/USD edged lower on Thursday, dropping from 1.088 to 1.085. If the EUR/USD pair declines, it may find support at 1.070, while resistance may be encountered near 1.100.
Markets this week are expected to experience some volatility as US tariffs take effect. Market reaction, however, has so far been muted this week, after experiencing high volatility for over a month due to Trump’s tariff threats. On Tuesday, the White House announced a global 25% tariff on global steel and aluminum imports to the US that would take effect on Wednesday.
The EU was quick to retaliate, with tariffs on US imports to the EU. European Commission President Ursula von der Leyen announced on Wednesday will impose counter tariffs on 26 billion euros worth of US goods. Tariffs will be imposed on a variety of US products, including beef, poultry, bourbon, peanut butter and jeans. Ursula von der Leyen stated that the EU deeply regrets having to adopt this measure, as the tariffs will likely raise inflation and cost jobs throughout the globe.
Hopes of political stability in Germany boosted the Euro this week. Germany is the Eurozone’s leading economy and an official government has not yet been formed after the German Federal elections in February. It seems likely, however, that Germany’s conservatives led by prospective Chancellor Frederich Merz and the Social Democratic Party will form a coalition. Last week, the leaders of the two parties agreed on a restructuring of Germany’s debt that will widen the country’s borrowing limit, boost defense spending and economic growth. The plan has already been set in motion and was discussed by the German Parliament in a special session on Thursday, in which Merz struggled to convince policymakers of the necessity of his economic reform.
The ECB lowered its benchmark interest rate by 25 basis points last week, bringing its main refinancing rate down to 2.65% from 2.90%. ECB rate cuts put pressure on the Euro, but this week’s rate cut was fully priced in by markets and its effect on the currency was muted.
The Monetary Policy Statement issued after the conclusion of the meeting included the ECB’s assessment that its monetary policy is becoming meaningfully less restrictive. This was interpreted by markets as a sign that the central bank is approaching a point of policy normalization and future ECB rate cut expectations dropped. The ECB also raised its inflation outlook for 2025, however, indicating that the central bank is prepared to deal with rising inflationary pressures.
In her speech after the policy meeting, ECB President Christine Lagarde stressed that the latest rate cut was necessary to ensure economic stability in the Euro area. Lagarde also reiterated her former statement that the central bank’s policy will remain data dependent and warned that the ECB will need to stay vigilant in these uncertain times.
On the data front, German Balance of Trade data released on Monday, which represents the Difference in value between imported and exported goods, were disappointing. German Trade Balance dropped to 16.0B in January from 20.7B in December, against expectations of a 21.0B reading. German industrial production expanded by 2.0% in January, exceeding expectations of 1.6% growth and December’s 1.5% contraction.
Revised GDP data showed that the Eurozone economy expanded by 0.2% in the final quarter of 2024 after expanding by 0.3% in the second quarter, against original estimates of 0.1% growth. The economic outlook of the EU remains fragile as prolonged tightening has brought the Euro area economy to the brink of recession.
EU CPI Flash Estimate data released on Monday showed that Eurozone inflation remains above the ECB’s 2% target and may prevent the ECB from cutting interest rates further. Eurozone inflation rose to 2.4% year-on-year in February after rising by 2.5% in January, exceeding expectations of a 2.3% print. Core CPI, which excludes food and energy, dropped to 2.6% in February from 2.7% in January but also came in higher than the 2.5% reading anticipated.
GBP/USD edged lower on Thursday, dropping from 1.296 to 1.294 as the dollar gained strength. If the GBP/USD rate goes up, it may encounter resistance at 1.304, while support may be found near 1.280.
The Sterling gained strength this week as the British government chose not to retaliate against the US on steel and aluminum imports. After the EU announced retaliatory tariffs against the US, the UK stands out by not reacting to Trump tariffs. The British government expressed disappointment on Wednesday over the announcement of 25% US tariffs on steel and aluminum but did not impose taxes on US imports to the UK.
RICS House Price Balance data released on Thursday, showed that Britain’s housing market had its slowest month in over a year in February. This index is an indicator of housing inflation and a low reading indicated reduced price pressures in the housing market.
BOE policymakers cut interest rates by 25 basis points in February and the Official Bank Rate was reduced from 4.75% to 4.5%. Seven out of nine MPC members voted in favor of a 25 basis point rate cut, while surprisingly, the other two members were more dovish, voting for a 50 basis point rate cut.
Bank of England Governor Andrew Bailey has hinted at further rate cuts but has stressed, at the same time, that the BOE will need to decide on its policy on a meeting-by-meeting basis and has refused to commit to a timeline or magnitude of future rate cuts. Markets are currently pricing in over 50 bps of easing by the end of 2025. The BOE currently anticipates that the British economy will grow by 0.75% by the end of 2025 and inflation will rise from 2.5% to 3.7%.
Price pressures in the UK are rising, reducing the odds of a BOE rate cut in February and putting pressure on the Sterling. Headline inflation in the UK rose by 3.0% annually in January up from 2.5% in December, against expectations of a 2.8% print. Core inflation, which excludes food and energy, rose by 3.7% year-on-year in January from 3.2% in December, which was in line with expectations.
The British economy expanded by 0.4% in December, following expansion by 0.1% in November and exceeding expectations of a 0.1% print. Preliminary GDP data for the fourth quarter of 2024 showed that the British economy expanded by 0.1% against estimates of 0.1% contraction and following economic stagnation in the third quarter of 2024.
This coming week British GDP data are due on Friday and are expected to show that the British economy expanded by just 0.1% in January after expanding by 0.4% in December.
USD/JPY edged lower on Thursday, dropping from 148.3 to 147.7. If the USD/JPY pair declines, it may find support at 146.5. If the pair climbs, it may find resistance at 150.2.
Concerns that Japan will not escape from US tariffs put pressure on the Yen this week. US President Donald Trump announced heavy tariffs on certain products on Tuesday. Japan’s trade minister Yoji Muto had a meeting with representatives from the White House but stated that he did not receive a response that Japan would be exempt.
Final GDP data released on Tuesday for Japan were disappointing, putting pressure on the Yen. Final GDP data for the final quarter of 2024 showed that the Japanese economy expanded by only 0.6% against expectations of 0.7% growth. Final GDP data for the third quarter of 2024 showed that Japan’s economy expanded by 0.3%, down from 0.7% in the second quarter.
The BOJ raised its interest rate by 25 basis points in January, from 0.25% to 0.50%, its highest level since 2008. In addition, the BOJ adjusted its inflation projections upward, to reflect the depreciation of the yen and rising oil prices, hinting at more rate hikes down the road. Policymakers expect Japan’s inflation to rise to 2.4% in 2025, up from previous estimates of 1.9%, and above the central bank’s 2% target.
BOJ Governor Kazuo Ueda hinted that the central bank will continue to raise interest rates if Japan’s economy continues to improve and the BOJ 2% inflation target is reached. Ueda emphasized, however, that the timeline of future rate hikes will depend on economic and inflationary conditions. Markets currently anticipate that the BOJ will raise interest rates to a peak interest of 1.00% over the next two years.
Markets anticipate that the BOJ will raise interest rates at least one more time this year. The BOJ is expected to raise interest rates by approximately 75 basis points in the next two years, which will bring the central bank’s peak rate to 1.25%.
Market odds of a rate hike at the BOJ policy meeting next week on the 19th, however, are low and the next BOJ rate hike is not priced in before July. Market participants will focus mostly on Ueda’s speech after the meeting to pinpoint the timeline of the next rate hike with more accuracy.
Economic activity data released on Monday for Japan was disappointing, putting pressure on the Yen. Average Cash Earnings rose by just 2.8% in January, missing expectations of 3.2%, while December’s print was also revised downward to reflect 4.4% growth.
Inflation in Japan is on the rise, raising the odds of future rate hikes and providing support for the Yen. The headline Tokyo CPI inflation rose to 3.4% annually in January from 3.0% in December. National Core inflation in Japan rose by 3.2% year-on-year in January from 3.0% in December against expectations of a 3.1% print. In addition, BOJ Core CPI rose to 2.2% year-on-year in January from 1.9% in December.
The content provided in this material and/or any other material that this content is referred to, whether it comes from a third party or not, is for information purposes only and shall not be considered as a recommendation and/or investment advice and/or investment research and/or suggestions for performing any actions with financial products or instruments, or to participate in any particular trading strategy and cannot guarantee any profits. Past performance does not constitute a reliable indicator of future results. TopFX does not represent that the material provided here is accurate, current, or complete and therefore shouldn't be relied upon as such. This material does not take into account the reader's financial situation or investment objectives. We advise any readers of this content to seek their own advice. Without the approval of TopFX, no reproduction or redistribution of the information provided herein is permitted.
Written by:
Myrsini Giannouli
présence dans l'industrie en tant que fournisseur de liquidités
et une exécution fiable
séparés
de premier ordre
Le site Web que vous consultez actuellement est exploité par TopFX Global Ltd, une entité réglementée par la Financial Services Authority (FSA) des Seychelles avec une licence de négociant en valeurs mobilières n ° SD037 qui n'est pas établie dans l'Union européenne ou réglementée par un autorité nationale compétente de l'UE. Autorité.
Si vous souhaitez continuer, veuillez confirmer que votre décision sera de votre propre initiative et qu'aucune sollicitation n'a été faite par TopFX ou toute autre entité au sein du Groupe.
Ne plus afficher ce message
Le site Web TopFX utilise des cookies pour optimiser l'expérience utilisateur.
Ces cookies relèvent des catégories suivantes : cookies essentiels, fonctionnels et marketing. Les cookies marketing peuvent également inclure des cookies tiers.
Vous pouvez personnaliser votre sélection des cookies que vous souhaitez accepter.
Ces cookies sont nécessaires au bon fonctionnement du site Web et ne peuvent pas être désactivés.
Les cookies fonctionnels permettent au site web de se souvenir des préférences des utilisateurs et des choix que vous faites sur le site web, tels que le nom d'utilisateur, la région et la langue.
Ces cookies sont utilisés pour suivre les visiteurs de nos sites Web et vous montrer des publicités plus pertinentes. Les cookies marketing incluent également les cookies tiers des partenaires. Pour plus d'informations sur la protection et la collecte des données, veuillez consulter notre politique de confidentialité et la divulgation des cookies.
