Articles

Good morning, afternoon and evening all. Any charts, technical analysis, trade ideas, thoughts, views, ForexLive traders would like to share and discuss with fellow ForexLive traders, please do so:

This article was written by Eamonn Sheridan at www.forexlive.com.

As is usual for a Monday morning, market liquidity is very thin until it improves as more Asian centres come online … prices are liable to swing around, so take care out there.

Indicative rates, little change from late Friday:

• EUR/USD 1.0813
• USD/JPY 149.36
• GBP/USD 1.2893, a touch of weaker – I’m sniffing around for news of relevance
• USD/CHF 0.8832
• USD/CAD 1.4356
• AUD/USD 0.6274
• NZD/USD 0.5737

This article was written by Eamonn Sheridan at www.forexlive.com.

Mark Carney announced an April 28 election, as was widely reported last week.

He went straight into campaign mode and proposed reducing the lowest income tax bracket by one percentage point.

Polls between the Liberals and Conservatives are tight and that will make for an interesting five-week campaign.

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

UPCOMING
EVENTS:

• Monday: Australia/Japan/EU/UK/US Flash PMIs.
• Tuesday: German IFO, US Consumer Confidence.
• Wednesday: Australia Monthly CPI, UK CPI, US Durable Goods
  Orders, BoC Minutes.
• Thursday: US Final Q4 GDP, US Jobless Claims.
• Friday: Tokyo CPI, BoJ Summary of Opinions, UK Retail
  Sales, French CPI, Canada GDP, US PCE, University of Michigan Consumer
  Sentiment (Final).

Monday

Monday is the Flash
PMIs Day for the Eurozone, the UK and the US. These are generally market moving
releases and they might influence the markets expectations for interest rates.
US PMIs will get special attention as they triggered the growth scare last
month.

• Eurozone Manufacturing PMI: 48.2 expected vs. 47.6
  prior.
• Eurozone Services PMI: 51.0 expected vs. 50.6
  prior.
• UK Manufacturing PMI: 46.4 expected vs. 46.9
  prior.
• UK Services PMI: 50.9 expected vs. 51.0 prior.
• US Manufacturing PMI: 51.8 expected vs. 52.7
  prior.
• US Services PMI: 50.8 expected vs. 51.0 prior.

Tuesday

The US Consumer
Confidence is expected at 94.0 vs. 98.3 prior. The last report showed Consumer Confidence posting the largest
decline since August 2021.

Stephanie
Guichard, Senior Economist, Global Indicators at The Conference Board said:
“This is the third consecutive month on month decline, bringing the Index to
the bottom of the range that has prevailed since 2022. Of the five
components of the Index, only consumers’ assessment of present business
conditions improved, albeit slightly.”

“Views of current
labour market conditions weakened. Consumers became pessimistic about future
business conditions and less optimistic about future income. Pessimism about
future employment prospects worsened and reached a ten-month high”.

Guichard added:
“Average 12-month inflation expectations surged from 5.2% to 6% in February.
This increase likely reflected a mix of factors, including sticky inflation but
also the recent jump in prices of key household staples like eggs and the
expected impact of tariffs.”

Wednesday

The Australian
Monthly CPI Y/Y is expected at 2.5% vs. 2.5% prior. As a reminder, the RBA cut
interest rates by 25 bps as expected at the last meeting bringing the Cash Rate
to 4.10% but it was accompanied by a more hawkish than expected guidance. We
got a weak Australian Employment report last week which weighed on the AUD although it
didn’t change the market’s pricing much as the focus remains on more inflation
progress.

The UK CPI Y/Y is
expected at 2.9% vs. 3.0% prior, while the M/M reading is seen at 0.5% vs. -0.1%
prior. The Core CPI Y/Y is expected at 3.6% vs. 3.7% prior, while Services
CPI Y/Y is seen at 4.9% vs. 5.0% prior.

As a reminder, the
BoE held interest rates steady at the recent policy decision with a 8-1 vote split
and the overall message was that the central bank is more focused on inflation
progress given the high wage growth and sticky inflation. The market is now
seeing 44 bps of easing by year-end compared to 53 bps before the BoE decision.

Thursday

The US Jobless
Claims continue to be one of the most important releases to follow every week
as it’s a timelier indicator on the state of the labour market.

Initial Claims
remain inside the 200K-260K range created since 2022, while Continuing
Claims continue to hover around cycle highs.

This week Initial
Claims are expected at 225K vs. 223K prior, while Continuing Claims are seen at
1896K vs. 1892K prior.

Friday

The Tokyo Core CPI
Y/Y is expected at 2.2% vs. 2.2% prior. As a reminder, the BoJ held interest
rates steady last week and didn’t offer anything new in terms of forward
guidance. The BoJ’s statement acknowledged heightened uncertainty surrounding
Japan’s economy though, adding a new reference to the “evolving situation
regarding trade.” This suggests that policymakers are closely monitoring
Trump’s tariff policies, with global trade developments remaining a key risk
factor for Japan’s outlook.

The US PCE Y/Y is
expected at 2.5% vs. 2.5% prior, while the M/M measure is seen at 0.3% vs. 0.3%
prior. The Core PCE Y/Y is expected at 2.7% vs. 2.6% prior, while the M/M
figure is seen at 0.3% vs. 0.3% prior.

Forecasters can
reliably estimate the PCE once the CPI and PPI are out, so the market already
knows what to expect. Therefore, unless we see a deviation from the expected
numbers, it shouldn’t affect the current market’s pricing.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

This news has been in the works, but the announcement has been made – Trump’s administration will revoke the temporary legal status of more than half a million migrants from Cuba, Haiti, Nicaragua and Venezuela:

• these migrants have been warned to leave the country before their permits and deportation shield are cancelled on 24 April

More here.

–

This is something to watch with respect to the US labour market:

• many of these migrants have been legally working in the US under the humanitarian parole program
• the revocation is likely to lead to some short-term disruption (shortages) in the labor market, particularly in industries that heavily rely on immigrant labor, such as agriculture, construction, hospitality, and healthcare
• its likely to lead therefore to higher wage costs (higher wages) if basic supply and demand economics holds

There will be flow-on effects such as lower payments made into Social Security and Medicare also.

–

Market participants, including the Federal Reserve, will be keeping an eye on the higher costs and other economic impacts. At the margin the impact is likely to be the Fed holding rates for longer, they keep telling us they are trying to assess economic developments as policies flip and flop (tariffs on and off and on and off and so on). If you are a trader it’ll pay to keep an eye on developments also.

–

The latest from the FOMC:

• Forexlive Americas FX news wrap 19 Mar: Fed keeps rates unchanged. See two cuts in 2025

IKR?

This article was written by Eamonn Sheridan at www.forexlive.com.

Japan and China resumed economic talks in Tokyo on Saturday—their first in six years—in an effort to ease tensions between the two countries amid growing trade pressure from the United States.

When asked if U.S. tariffs were part of the discussions, Japanese Foreign Minister Takeshi Iwaya said they were not a central focus in any of Saturday’s meetings.

He added that Japan and South Korea had agreed to maintain close cooperation and keep open communication with the U.S., following separate talks held with South Korea earlier that day.

He did not provide details on what was discussed with China’s Wang concerning U.S. tariffs.

As a ps, I posted this on Friday:

• US Senator Steve Daines will visit China for trade talks

Daines met with China’s Vice Premier He Lifeng on Saturday and will meet with Premier Li Qiang on Sunday. The reports on Saturday’s meeting didn’t really contain much of substance. The two will have discussed trade relationships. We await any constructive news. Trump has so far jacked up tariffs on China by 20%, so there is a lot of work to be done.

Say analysts at HSBC:

• “It is notable that the only US tariffs that have not been delayed or alleviated are those imposed on China on February 4 and March 4″

This article was written by Eamonn Sheridan at www.forexlive.com.

• Trump: We can talk about China tariffs
• Canada January retail sales -0.6% vs -0.4% expected
• Fed’s Williams: Current modestly-restrictive policy is ‘entirely appropriate’
• More from Fed’s Williams: We’re not in a hurry to make next mon policy move
• Eurozone March consumer confidence -14.5 vs -13.0 expected
• Fed’s Goolsbee: Business contacts are waiting on capital spending in light of tariffs
• What FedEx earnings reveal about the state of the economy
• ECB’s Stournaras: All available information points to another rate cut in April
• Fed’s Waller: I preferred to continue current pace of balance sheet runoff
• King Charles made an offer to Trump to join the Commonwealth, hoping to cool tensions
• Canada February new housing price index 0.1% versus -0.1% last month
• Trump unswayed at efforts to craft tariff deal – report
• Bakers Hughes oil rig count -1 at 486

Markets:

• WTI crude oil up 20-cents to $68.27
• US 10-year yields up 1.7 bps to 4.25%
• Gold down $22 to $3021
• S&P 500 up 0.1%, Nasdaq up 0.5%
• USD leads, AUD lags

It was a strange day in markets and I suspect that the quad witching had something to do with it. Equities were beaten up early but came back to life when Trump said there was ‘flexibility’ on tariffs ahead of April 2 and that he was going to talk with Xi. Prior to that the US dollar was broadly strong but it gave some back afterwards.

Aside from that, it looked like flows were in charge. The euro and pound bottomed out right at the European close in a flurry of USD strength. That partly unwound later but still left the dollar solidly higher on the day in a reversal of the recent trend. The euro touched 1.0798 from a high of 1.0861 in Europe. It bounced from the figure to end at 1.0815.

The Canadian dollar was in focus with retail sales data released. USD/CAD rose after the data as it modestly missed estimates and hit 1.4375 but the advance reading for February sales was better than feared and that move unwound along with the better risk mood and a bounce in oil prices.

Gold hit an air pocket shortly after the US equity open in a quick fall to $3000 from $3035. Bids at the figure held though and that started a slow rebounded to $3023 last.

Overall, it wasn’t a big day for news or market moves. The comments from Fed officials highlighted the uncertainty on the outlook and a willingness to wait on economic data. That was totally in-line with what Powell said on Wednesday.

Have a great weekend.

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

Is the long-term bull market in the US dollar finally over?

Plenty of research notes this week highlight the end of the era of ‘American exceptionalism’ and that’s been a trading theme so far this year as the US dollar has sagged (though it’s bounced a tad today).

In any case, the speculative money has been squeezed out of the US dollar futures trade with CFTC positioning data showing that net USD positioning is short for the first time this year.

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

The USD was mixed in trading this week.

How did the greenback do vs the major currencies? Looking at the change % below, the dollar is higher vs the EUR, JPY, GBP, AUD and NZD. It is lower vs the CHF and the CAD. The biggest gain was vs the AUD at 0.79%. The greenback fell by -0.14% vs both the CHF and the CAD.

During the week the negative rates unchanged, the Swiss National Bank rates by 25 basis points, the US Federal Reserve Rates unchanged in the Bank of England also kept its rates the same.

Below is a summary of the changes for the week vs the USD:

• EUR: +0.50%
• JPY: +0.41%
• GBP: +0.10%
• CHF: -0.14%
• CAD: -0.14%
• AUD: +0.79%
• NZD: +0.14%

In other markets this week what were the changes:

In the US debt market, yields moved lower across the curve:

• 2-year yield fell -7.5 basis points at 3.946%
• 5-year yield fell -9.0 basis points at or .003%
• 10 year yield fell -7.4 basis points at or .246%
• 30 year yield fell -3.5 basis points 4.591%

In the US stock market the major indices were mixed:

• Dow industrial average rose 0.91%
• S&P index rose 0.13%. The modest gain this week snapped a four week losing streak
• NASDAQ index-0.41% and is down for the fifth consecutive week.

In the European equity markets, the major indices moved higher:

• German DAX -0.41%
• France’s CAC +0.18%
• UK’s FTSE 100 +0.17%
• Spain’s Ibex, +2.65%
• Italy’s FTSE MIB, +0.98%

In other markets:

• Crude oil rose 1 dollar or 1.49%
• Gold traded to a new record high of $3057.51. The price rose $36.48 or 1.22%.
• Silver fell $-0.90 or -2.7%
• Bitcoin rose $1326 or 1.66%

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

The euro is on track to finish the week slightly lower but that follows two weeks of gains on a German agreement to suspend the debt brake in what the market sees as a shift to a more-active fiscal policy.

With that, analysts at CIBC see a steadily rising euro over the course of the forecast horizon to end 2026 when they see EUR/USD hitting 1.15. Part of that is the ‘loss of American exceptionalism’ that’s a theme that’s gripped the FX market.

On the way to 1.15, CIBC sees the euro finishing this year at 1.12.

Structural reform accompanied by German infrastructure spending supports the notion of narrowing US/EU
growth differentials and accordingly a longer term EUR/USD rally. Meanwhile, given that the Eurozone looks on
course to maintain a residual current account surplus over the course of the next 2-3 years, a bias towards an
apparent crowding in of investment flows supports less appetite for external assets. Given the scope for an
extended position adjustment, as a by-product of a higher growth trajectory, we now anticipate EUR/USD
extending towards 1.12 by year-end.

Another spot where they see pronounced USD weakness is against the yen with that pair falling to 138.00 this year from 149.19 currently.

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

In light of rising tariff risks, elevated inflation expectations, and stretched equity/credit valuations, Goldman Sachs outlines the strategic case for commodity investing. Far from being just a play on rare “supercycles,” commodities can provide attractive long-term returns, portfolio diversification, and superior inflation protection — particularly during late-cycle phases or supply shocks when both equities and bonds tend to falter.

Key Points:

1️⃣ Returns Go Beyond Inflation 📈

• Commodity futures offer a “risk premium” for bearing price volatility.
• This premium supports positive long-term returns beyond just tracking inflation.

2️⃣ Powerful Diversification Benefits 🔀

• Commodities have low correlation to traditional assets in normal times.
• Correlation turns negative when most needed — during late cycles or disruptions.
• Direct commodity exposure is more diversifying than commodity producer equities, which track stock indices.

3️⃣ Superior Inflation Hedge vs. TIPS and REITs 💹

• Broad commodity indices often outperform TIPS and REITs during inflationary periods.
• Commodities are more directly tied to price pressures and less sensitive to rising interest rates.

Conclusion:

Goldman Sachs emphasizes that commodities offer a compelling long-term investment case, particularly in high-inflation, uncertain macro environments. They not only outperform traditional inflation hedges like TIPS and REITs but also enhance diversification and deliver an added return premium, making them a valuable strategic allocation in diversified portfolios.

For bank trade ideas, check out eFX Plus. For a limited time, get a 7 day free trial, basic for $79 per month and premium at $109 per month. Get it here.

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

USD/CAD rose as high as 1.4373 today but has trimmed that back by 40 pips and is closing in on unchanged on the day.

The pair rose after today’s Canadian retail sales data, starting a 40-pip climb that’s been now fully reversed. Mixed in with that move was a broader USD rally as stock markets were beaten up. As for the retail sales report, I’m not sold on the idea that it was a bad one and neither is CIBC, who highlighted that the 0.6% decline (vs -0.4% exp) came after a 2.6% gain in December.

“All told, the weakness in January and February appears to be a
reversion to more trend-like activity and isn’t a cause for concern,” CIBC writes.

Notably, the advance estimate for February was -0.4% which isn’t bad in light of all the tariff angst though clean reads are going to be tough with the HST holiday from Dec 15 to Feb 15 followed by the removal of the carbon tax on April 1.

CIBC:

Consumer spending was clearly improving in response to lower interest rates in H2 2024. And
looking through the volatility shows a normalization in activity in Q1 following the start of the GST holiday. However, tariff
uncertainty may inject caution into consumption ahead on concerns around employment prospects, depending on what
the tariff outcome is on April 2nd. Consumption is therefore likely to slow over the first half of the year, but accelerate in
H2 and 2026 if a worst-case tariff scenario is avoided.

As for the loonie, the rebound today was helped along by Trump saying he was ‘flexible’ on tariffs. Canada is one of the countries in the cross-hairs but Trump is finding few allies in his push to make it the 51st state. His talk of subsidies to Canadian industry is also bizarre given that the US runs a manufacturing surplus with Canada. The driver behind the US trade deficit with Canada is purely oil, which is sold south at a discount.

That said, Trump lieutenants have hinted at a fresh position on April 2 so there is some optimism the worst will be avoided. I can’t imagine we get a move out of the 1.42-1.45 range until we get a clearer picture on that.

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