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Many reports today say a deal is coming between the US and Ukraine on creating an investment fund with the US to invest in natural resources in the country. The details of that are still sketchy but it looks like it’s basically done and Zelensky will fly to the US on Friday to sign it with Trump.

Reuters cites two sources saying the plan is to travel Friday.

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

BofA remains structurally bearish on JPY, raising their USD/JPY forecast to 165 (previously 160) and expecting the 10-year JGB yield to reach 1.65%. They see continued JPY weakness driven by accelerating Japanese outward investment, as households shift wealth away from yen deposits into foreign assets amid persistent inflation.

Key Points:

1️⃣ Higher USD/JPY Forecast 📈

• New target: 165 by year-end (previously 160).
• Consensus remains lower at 148 (Bloomberg median).
• JGB yields forecasted at 1.65% (up from 1.4%).

2️⃣ BoJ Terminal Rate Revised Upwards 🏦

• New BoJ terminal rate forecast: 1.5% (previously 1.0%).
• However, still distant from positive real interest rates.

3️⃣ Accelerating Outward Investment 🌏

• NISA scheme (2024 upgrade) has accelerated household shifts into foreign assets.
• Japanese investors seek protection from rising domestic inflation.
• Toshins (Japanese mutual funds) inflows into foreign assets indicate continued rebalancing away from JPY.

Conclusion:

BofA reinforces its structurally bearish JPY stance, forecasting USD/JPY at 165 by year-end. Japanese households’ portfolio rebalancing and lack of positive real rates will likely drive continued JPY weakness.

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

China’s stock market has been a darling lately, something I suspected was coming a month ago.

What wasn’t clear was who was doing the buying — domestic or foreign investors — and how much conviction they have. In October, we got a taste of this dynamic as the rest of the world briefly fell in love with Chinese stock markets only to see most of the rally dashed.

This time money is pouring into Hong Kong again, which is always a sign that it’s more of a foreign bid rather than domestic but today we saw a different side. Yesterday stocks in China were crushed with US ETFs falling 5%. That was seen in the open in China but instead of falling further, the bottom was on the initial tick and there was some good buying (and domestic) for most of the day until sellers crept back in late.

Even with the late selling, the index finished well off the lows and I take that as a good sign. More importantly, I take the buying-the-dip in Asian trading as a sign that domestic investors are wading in.

That’s a critical change and indicates that Chinese investors might finally be starting to feel some optimism. Remember, China was locked down 5 years ago this month and it’s been dark days since then. Are we finally seeing green shoots? If not animal spirits?

It’s early and much hinges on the National People’s Congress starting March 5 but I take today’s price action as a good sign — not just for China but for global growth trades.

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

Fox Business reporter Charlie Gasparino is repeating some of the earlier reporting about an investment fund and minerals deal with the US. His report also has this interesting tidbit:

“They expect Zelenskyy also to agree to concessions in terms of ceding control of some land for peace.”

Now that could just refer to the small area of Kursk (in Russia) that Ukraine currently holds, or it could be more ominous.

The report also says that JPMorgan, Blackrock and McKinsey are involved in the deal.

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

Zelensky’s government is ready to sign the US minerals deal after the US dropped demands for a right to $500 billion in potential revenue, according to the FT.

The report has helped to lift the euro and boost broader sentiment.

he finalized agreement, reviewed by the FT, outlines the creation of a fund to which Ukraine would allocate 50% of the proceeds from the future monetization of state-owned mineral resources. The fund’s purpose would be to invest in projects within Ukraine.

Still, it doesn’t have any references to US security guarantees.

The deal will need to go through Ukraine’s parliament.

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

Auction details:

• High yield: 4.123%
• WI level at the time of the auction 4.133%:
• Tail -1.0 basis points vs six-month averages 0.1 basis points
• Bid to cover 2.42X vs six-month average of 2.40X
• Directs (domestic buyers) 14.5% vs six-month average of 19.2%
• Indirects (international buyers) 74.9% vs six-month averages 68.6%
• Dealers 10.6% vs six-month average of 12.3%

Auction Grade:B

The tail of -1.0 basis points shows aggressiveness mainly from international buyers. They took 6% more than the average. Domestic buyers were less than the average for the 2nd day in a row. The dealers still took a relatively light 10.6%.

Bid to cover was near the average.

This article was written by Greg Michalowski at www.forexlive.com.

The US treasury will auction off $70 billion of 5-year notes at the top of the hour.

Yesterday, the first of three coupon auctions this week saw strong investor demand for the 2-year notes especially from overseas investors. Indirect buyers were awarded 85% of the auction. To get that amount, they bid -1.1 basis point through the WI level at the time of the auction (which is indicative of strong demand).

Today’s 5- year note auction will be compared to the six-month averages of the major components.

• Tail: 0.1 basis points
• Bid to cover: 2.40X
• Directs (domestic demand): 19.2%
• Indirects (international demand): 68.6%
• Dealers: 12.3%

This article was written by Greg Michalowski at www.forexlive.com.

UK PM Starmer is saying:

• Increase in defense spending is an opportunity to rebuild Britain’s industrial base
• Investment will maximize British jobs and growth

He also commented that he spoke with France’s President Macron this afternoon and that he will host a number of leaders for a meeting on Sunday

This article was written by Greg Michalowski at www.forexlive.com.

Closing changes:

• Stoxx 600 +0.1%
• German DAX -0.1%
• France CAC -0.5%
• UK FTSE 100 +0.1%
• Spain IBEX +0.9%
• Italy’s FTSE MIB +0.6%

European stocks hit highs midway through the session but hawkish comments from Schnabel and Merz shutting down the debt brake excitement were drags, then the US selling hit. But given all that, a near-flat finish is impressive.

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

Johnson isn’t giving much away here but it doesn’t look like he has the votes, and he won’t go forward unless he has assurances.

A big (and underrated) part of the recent market swoon is growing concern that Republicans don’t have to right policy mix to get Trump’s tax cuts extended.

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

• Prior service sector revenues +7.4
• Revenue index +8.2 vs +5.7 prior

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

Earlier today, Mexico’s Sheinbaum expressed confidence about a trade deal with the US and she’s now doubled down, saying there have been no trade conflicts with US. that could derail a possible deal ahead of tariff deadline next week.

Meanwhile, the FT is out with a report saying Peter Navarro is pushing to oust Canada from the Five Eyes spying group. Navarro is Trump advisor for trade and manufacturing so it’s not a security issue but a leverage issue. Canada isn’t giving the US what it wants, which I believe is an earlier re-opening of the USMCA negotiations but it could be something else.

As for Navarro’s idea, it’s unclear if it’s gained traction with Trump but it is being discussed, the FT reports.

I just don’t see Trudeau giving much. He’s already resigned so he really has nothing to lose and he’s regained some popularity by standing up to Trump.

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