Forexlive Americas FX news wrap: Growth concerns mount on a crazy day

• Trump: Zelensky disrespected Oval Office and he can come back when he’s ready for peace
• More from Trump to Zelenskyy: You either make a deal or we are out
• Atlanta Fed GDPNow tracker swan dives into recessionary territory
• US January PCE core +2.6% vs +2.6% expected
• US advance goods trade balance for January -$153.26 billion versus -$122.0B last month
• Canada GDP for Q4 annualized 2.6% versus 1.8% estimate
• US advance wholesale inventories +0.7% vs -0.5% exp
• Trump: This is a great agreement if war stops. Zelenskyy: I want to see what US is to do
• Goolsbee: Cautions against over-anticipating productivity impact.
• Mexico open to new tariffs on China to avoid Trump duties
• Bessent gives away the game on the Mexico/Canada tariff strategy
• Canada December FY YTD budget deficit at $21.72B vs $22.72B a year ago
• Germany February preliminary CPI +2.3% vs +2.3% y/y expected

Markets:

• Gold down $23 to $2852
• US 10-year yields down 7.7 bps to 4.21%
• WTI crude oil down 36-cents to $70.00
• S&P 500 up 1.2%
• USD leads, NZD lags

Every day is an adventure so far in 2025.

This one had it all. We started out with some economic data that highlighted a benign inflation environment as the PCE report was very close to estimates. All eyes were there but at the same time the January trade balance numbers were released and saw a huge influx of imports.

That really shouldn’t have been a surprise given tariff threats and the potential to front-run them but it wasn’t in the economist estimates and it took until the Atlanta Fed GDPNow number highlighted the impact on Q1 GDP for the market to really care. That led to a further bid in bonds and now we’ve seen the yield curve invert again and year-end pricing is for 68 bps in easing compared to 40 bps a couple weeks ago.

Despite that, the US dollar was a big winner on the day. Much of that comes down to geopolitics as Trump and Zelensky had a major falling out in the Oval Office, in public. That led to selling in the euro and some widespread confusion along with USD bids. Initially, it led to selling in stocks as well but was followed by an incredible turmaround into the close, including a 50 point rise in the S&P 500 in the final minutes of trading.

I’m inclined to think there was some month-end rebalancing there or short covering but it could have been driven by rate cut hopes/expectations. On that front, next week is a big one with non-farm payrolls coming up. Internationally, we get China’s National People’s Congress as well, which is also sure to be a big market mover.

Finally, the loonie got a boost initially from strong GDP numbers but it sold off later in a catch-down to the antipodeans. There are some real concerns about tariffs with Tuesday’s deadline a big risk. USD/CAD was last at 1.4469, finishing near the highest since Feb 3.

Have a great weekend, I’m sure March will be just as volatile as February.

This article was written by Adam Button at www.forexlive.com.