Forexlive Americas FX news wrap: Bloodbath in risk assets

• NY Fed one-year inflation expectations 3.1% vs 3.0% prior
• ECB’s Nagel unveils a 12-point vision for German reform
• US Energy Sec says “I won’t have a specific price” for where he wants oil to go
• UK PM Starmer talked with Pres. Trump ahead of Saudi talks
• Ontario adds 25% surcharge to all electricity exported to the United States
• US February employment trends 108.56 vs 108.35 prior

Markets:

• WTI crude oil down $1.11 to $65.95
• US 10-year yields down 9.7 bps to 4.22%
• Gold down $25 to $2885
• S&P 500 down 2.6%
• Nasdaq down 4.0% in worst day since Sept 2022
• JPY leads, CAD lags

If you ignore equities it wasn’t that bad of a day for risk assets. Yes, yields fell 7-10 bps across the curve but they stayed within recent ranges. In FX, the market mostly held it together even as the Nasdaq looked poised for its worst day since 2022.

There may be some signal in there.

For one, the heaviest selling was in tech and particularly the AI and meme/momentum names. Some of them were crushed by double digits today, including a 16% drop in Tesla as it grows increasingly clear that Musk’s government work is detrimental to auto sales. But it was a wide-ranging tech selloff with Mag 7 names all hit hard, including a 5% decline in Apple.

Uncertainty around the existence of a Trump put is the main drag at the moment. Comments from Friday and the weekend talking about pain in the economy, a ‘detox’ and even Trump tolerating a recession. Tariffs are a big one along with a potential fight over a budget and extension of tax cuts in Congress.

The main avenue for risk aversion in FX today was via the yen as it climbed broadly. USD/JPY fell as low as 146.64 before finding some support and climbing 60 pip in the second half of the day. Later it was commodity currencies breaking down on growth concerns but even there, the declines weren’t exactly headline grabbing. AUD/USD briefly broke Friday’s low and continued another 25 pips lower but has since bounced to retest that line.

Meaningful comments or economic data were absent. If anything, the New York Fed data on inflation expectations were a dovish development.

In the day ahead we get JOLTS but it’s a dated number given the DOGE layoffs and tariff turmoil. The big one of the week comes with US CPI on Wednesday and the BOC decision shortly afterwards.

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