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• Prior month 0.3%
• Business inventories 0.2% versus 0.2% estimate
• Total business inventories to $2590 versus $2585.2 billion last month
• Retail inventories ex auto 0.1% vs 0.5% prior month.

Details from the Census Bureau

• Sales:

  • Total sales (distributive trade + manufacturers’ shipments) rose 1.2% from January 2025

  • Sales increased 3.6% year-over-year from February 2024

  • Seasonally adjusted, not adjusted for price changes

  • Total value: $1,921.1 billion

• Inventories:

  • Total inventories rose 0.2% from January 2025

  • Inventories were up 2.1% compared to February 2024

  • Total value: $2,590.0 billion

  • Seasonally adjusted, not adjusted for price changes

• Inventories-to-Sales Ratio:

  • 1.35 in February 2025

  • Down from 1.37 in February 2024

Not a big spike from the expectations of tariffs. Looking back to Trump 1.0, the business inventories remained fairly contained (pre-covid) but with higher spikes than what we are currently seeing (above +0.5%). One can argue, higher is yet to come (this is February), but retail sales are maintaining strength. So inventories may remain more lean despite the tariffs. We will see.

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

• Prior was 2.75%
• The market was pricing in a 42% chance of a cut and 58% chance of no change
• A slight majority of economists were expecting no change
• There is also an unusual degree of uncertainty about the economic outcomes within any tariff scenario
• Tariffs and uncertainty have weakened the outlook for global growth
• Extreme market volatility is adding to uncertainty
• The Canadian economy is slowing as tariff announcements and uncertainty pull down consumer and business confidence
• Consumption, residential investment and business spending all look to have weakened in the first quarter
• Businesses are reporting plans to slow their hiring
• Our focus will be on ensuring that Canadians continue to have confidence
  in price stability through this period of global upheaval

The guidance from the Bank of Canada offers a hawkish bent, despite a statement filled with downbeat comments on growth.

“Monetary policy cannot resolve trade uncertainty or offset the impacts
of a trade war. What it can and must do is maintain price stability for
Canadians.”

USD/CAD is down to 1.3883 from 1.3920 on the kneejerk reaction. I suspect this will get unwound in time if it looks like Canada is headed for a bleaker growth outcome. The latest jobs report was poor and another one would indicate that 2.75% rates are too high. The housing market is also cracking.

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

• Prior was +0.7% (revised to +0.8%)
• Industrial production y/y +1.34% vs +1.44% prior
• Ex cars/parts -0.4% vs +0.4% prior
• Capacity utilization 77.8% vs 78.0% expected
• Manufacturing output +0.3% vs +0.3% expected

This is a setback and comes despite a another strong month for auto manufacturing. That runs against the downbeat commentary from automakers.

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

• Prior was +0.2%

Details:

• Ex-autos +0.5% vs +0.3% exp
• Prior ex autos +0.3% (revised to +0.7%)
• Control group +0.4% vs +0.6% expected
• Prior control +1.0% (revised to +1.3%)

This is a good set of headlines and the upward revisions nullify the slight miss on the control group. Never underestimate the spending power of the US consumer.

Fed pricing for the year ahead before the data was -102 bps and is unmoved in the immediate aftermath.

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

US retail sales are due at he bottom of the hour and expected to rise 1.3% on the headline, 0.3% ex-autos. and 0.6% on the control group.

The first thing to watch is whether the plunge in consumer confidence since January has led to any decreases in spending. The indication from most companies is that spending has held up but we will be looking for pockets of weakness.

The second thing in the composition of spending is a shift to buying goods from services. This would capture an effort by consumers to get ahead of tariffs. In turn, it would mean cutting back on things like travel and restaurants. We are likely to see more of that in the April report but it could have started sooner.

The data is due out at 8:30 am ET. For more, see the economic calendar.

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

Headlines:

• Dollar comes under pressure again as risk mood gets unsettled
• Gold jumps above $3,300 as the surging run continues
• Trump: Japan is coming in today to negotiate tariffs and the cost of military support
• China says open to talks if Trump shows respect, names point person
• China Foreign Ministry: Urge US to stop threats and blackmail
• China reportedly mulls requesting Airbus to supply any new jets with extra set of engines
• Ex-China mouthpiece hits back at US, says “we’re curious to see who holds out longer”
• White House note shows US tariffs against China could be hiked up to 245%
• Nvidia said to have kept some customers in the dark about China restrictions – report
• UK March CPI +2.6% vs +2.7% y/y expected
• Eurozone March final CPI +2.2% vs +2.2% y/y prelim
• US MBA mortgage applications w.e. 11 April -8.5% vs +20.0% prior

Markets:

• CHF leads, USD lags on the day
• European equities lower; S&P 500 futures down 0.7%
• US 10-year yields up 0.6 bps to 4.329%
• Gold up 2.5% to $3,308.26
• WTI crude up 0.9% to $61.86
• Bitcoin flat at $84,023

As Nvidia gets slapped with a ban to sell its H20 chips to China, that weighed on the risk mood at the start of European trading. The dollar was offered alongside it as we returned back to the market theme from last week.

Tech shares were looking heavy with S&P 500 futures down 1.5% and Nasdaq futures down 2.3%, as gold surged to a fresh record high above $3,300. That comes as the dollar was pummeled lower with EUR/USD rising to near 1.1400 while USD/CHF slumped by roughly 1% to 0.8130. USD/JPY also dribbled lower to come close to touching the 142.00 mark again.

All that before a Bloomberg headline noting “China open to talks if Trump shows respect”. That got risk buyers excited with S&P 500 futures briefly paring losses at one point after. To me, it reads no different to what we saw last week when China said “if US wants to talk, it should show attitude for equality and respect”.

But if anything, it shows how this is a market that is desperate for a good headline to run. And it might get just that as Japan is headed for trade talks in Washington today. That said, keep this in mind when reading into that potential development.

S&P 500 futures are back down by 0.7% but off earlier lows at least, though there is still plenty of obstacles to work through the day.

As for the dollar, it is off earlier lows as well but still under pressure across the board. EUR/USD is still up 0.7% to 1.1357, USD/JPY down 0.4% to 142.70, USD/CHF down 1.0% to 0.8150, and AUD/USD up 0.5% to 0.6372 currently.

Amid the China headlines, gold dipped back from a high of $3,317 to $3,290 before picking back up to around $3,308 currently. The precious metal is up 26% year-to-date and has almost matched the gains for the entirety of 2024. 🤯

Elsewhere, the bond market is at least keeping the calm with long-end Treasuries not seeing much change on the day.

It’s now over to North America trading where we will be getting US retail sales, the Bank of Canada policy decision, Fed chair Powell’s speech, US-Japan trade negotiations, and of course more Trump headlines in the making.

This article was written by Justin Low at www.forexlive.com.

The BoC is
expected to keep rates unchanged at 2.75% today. As a reminder, the BoC cut interest
rates by 25 basis points to 2.75% as expected at the last meeting amid concerns
over weaker growth ahead due to the trade uncertainty and US tariffs. The
central bank emphasized a cautious approach to future decisions, balancing the
upward pressure on inflation against the downward pressure on weaker demand.

The
market sees a 57% probability of no change today and a total of 50 bps of easing by year-end. There are good chances that the BoC cuts by 25 bps though following yesterday’s softer than expected Canadian CPI figures.

The pair has been mainly driven by the USD weakness amid the trade tensions and it will likely continue to do so. In fact, the market focus is still on trade negotiations and today’s meeting with Japan could move the pair more than the BoC itself. Positive developments could see the greenback appreciating in the short term on the fact that rate cuts for the Fed would get priced out, but in the medium to long term, the USD will likely continue to depreciate as the path of least resistance for the Fed is for cutting rates.

USDCAD Technical Analysis – Daily Timeframe

On the daily chart, we can see that the price recently broke below the 2022 high around the 1.40 handle before pulling back to retest the level. This is where we can expect the sellers to step in with a defined risk above the level to keep pushing into the long term trendline around the 1.37 handle. The buyers, on the other hand, will want to see the price breaking higher to start targeting the downward trendline around the 1.42 handle.

USDCAD Technical Analysis – 4 hour Timeframe

On the 4 hour chart, we can see more clearly the rejection around the 1.40 handle. That’s going to be the level to break for the buyers to start looking for higher highs. Due to the recent pullback, we have now a counter-trendline defining the bullish momentum. The buyers will likely lean on the trendline to position for a rally into the major downward trendline, while the sellers will look for a break lower to increase the bearish bets into new lows.

USDCAD Technical Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that the price is bouncing from a minor support zone around the 1.39 handle. On an intraday basis, buyers could split the position between the support and the counter-trendline targeting the 1.41 handle. The sellers, on the other hand, will likely pile in at every break to the downside.

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

But just in case this was missed, you can check out the White House fact sheet here. It says: “China now faces up to a 245% tariff on imports to the United States as a result of its retaliatory actions.”

Beijing had already responded last week in saying that they will ignore the US on any further escalation in tariffs here. As they mentioned, it already made zero economic sense in conducting trade before last week’s escalation. So, what more with any further hike in tariffs. And even the latest hard data is pointing towards that.

This article was written by Justin Low at www.forexlive.com.

Japan economy minister, Ryosei Akazawa, will be meeting with Trump himself alongside Bessent and Lutnick later today. As a reminder, Japan was slapped with 24% tariffs initially prior to the pause last week and they are still subject to the 25% auto tariffs separate to that.

As much as Japan tried to talk a hard line coming into negotiations, they are at the end of the day still one of the US’ closest allies. And at this point, they are perhaps the closest one already given the breakdown in relations elsewhere. Ishiba has said they won’t be making “big concessions” but we all know that they’re not willing to go tit-for-tat against the US no matter what.

This makes this one of Trump’s easier battles to win in the tariffs war – if not the easiest.

Despite that, this will still act as a key litmus test on Trump’s willingness to compromise. The thing is the majority will expect some kind of positive news to come from the negotiations. But if it goes south, it will reflect poorly on the overall situation. If even Japan can’t reach a deal, what more the EU and China.

This is a market that is desperate for good news and it might get some from Japan’s visit this week. But best be warned, it will be tough not to look past the bias of Japan’s relationship with the US in all of this. Even with a positive outcome, I wouldn’t take it as a strong signal of how other negotiations will pan out – especially with China, if we ever get there.

This article was written by Justin Low at www.forexlive.com.

• Prior +20.0%
• Market index 267.5 vs 292.3 prior
• Purchase index 164.2 vs 172.7 prior
• Refinance index 841.9 vs 961.4 prior
• 30-year mortgage rate 6.81% vs 6.61% prior

The spike in the average rate of the most popular US home loan wasn’t as profound to be honest but still enough to put a drag on overall activity. Both purchases and refinancing activities declined, with the latter seeing a drop back after the surge higher in the week before. It will take some time to filter through the noise amid all the volatility in the rates market. So, we’ll see how that feeds through to housing in the months ahead.

This article was written by Justin Low at www.forexlive.com.

• Japan is coming in today to negotiate tariffs, the cost of military support and “trade fairness”.
• I will attend the meeting, along with Treasury and Commerce Secretaries.
• Hopefully something can be worked out which is good (GREAT!) for Japan and the USA.

Trump is up and running and providing updates on his schedule. Watch out for headlines on the talks as markets are eager for positive news as we saw earlier with the spike in risk assets triggered by the Bloomberg report on China willing to talk with the US. Maybe, we will also get some post on China from Trump today, who knows.

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

From yesterday: China calls for its airlines to halt any further Boeing jet deliveries amid trade strife

Bloomberg with the latest update on the matter, reporting that Beijing is considering to ask Airbus to provide an extra set of engines to any new jets supplied to China. As the fallout with the US continues, the EU and China are continuing to be pressed into working together on multiple fronts. The saying of the enemy of my enemy is my friend continues to fit the current predicament.

This article was written by Justin Low at www.forexlive.com.