Market correlations were a mess, as traders juggled pre-NFP positioning with tariffs developments and monetary policy announcements.
U.S. equity indices closed deep in the red while WTI crude oil tossed and turned in anticipation of the OPEC+ production hike next month.
Here’s a breakdown of the biggest moves and movers in the last trading sessions:
Headlines:
- RBNZ head Adrian Orr unexpectedly announced resignation, Deputy Gov. Hawkesby will be the acting governor until March 31
- Australia Building Permits growth for January 2025: 6.3% m/m (0.4% m/m forecast; 0.7% m/m previous)
- Australia Balance of Trade for January 2025: $5.62B ($4.9B forecast; $5.09B previous); exports rate was 1.3% m/m vs. 1.1% m/m previous; imports rate fell to -0.3% m/m vs. 1.1% m/m previous
- Swiss Unemployment Rate for February 2025: 2.9% (3.0% forecast; 3.0% previous)
- U.K. S&P Global Construction PMI for February 2025: 44.6 (49.0 forecast; 48.1 previous)
- Germany HCOB Construction PMI for February 2025: 41.2 (44.0 forecast; 42.5 previous)
- Euro area HCOB Construction PMI for February 2025: 42.7 (46.4 forecast; 45.4 previous)
- Euro area Retail Sales growth for January 2025: -0.3% m/m (0.4% m/m forecast; -0.2% m/m previous)
- ECB cut interest rates by 0.25% as expected, growth forecasts downgraded as Lagarde highlighted weak consumer confidence and trade risks from tariffs uncertainty
- U.S. Balance of Trade for January 2025: Deficit increased by 34% m/m to -$131.4B (-$123.0B forecast; -$98.4B previous); Exports grew by 1.2% m/m; imports grew by 10% m/m
- U.S. Initial Jobless Claims for March 1, 2025: 221.0k (250.0k forecast; 242.0k previous); Continuing Jobless Claims increased to 1,897.0k vs. 1,862.0k previous
- Canada Balance of Trade for January 2025: $3.97B (-$0.1B forecast; $0.71B previous); exports grew by 5.5% m/m; Imports grew by 2.3% m/m
- Canada Ivey PMI for February 2025: 55.3 (49.2 forecast; 47.1 previous)
- FOMC member Patrick Harker highlighted growing risks from threats to dollar reserve status, declining business and consumer confidence
- U.S. President Trump announced a tariffs delay to April 2 for Canada and Mexico products covered by USMCA
- FOMC member Christopher Waller does not see a case for a March cut, despite signs of softer economic growth
Broad Market Price Action:
Dollar Index, Gold, S&P 500, Oil, U.S. 10-yr Yield, Bitcoin Overlay Chart by TradingView
A bit of calm with some hints of risk-taking was seen early in the day, as Asian equity indices were in a positive mood on easing U.S. tariffs concerns from the previous session.
WTI crude oil and bitcoin took advantage of these risk-friendly moves while U.S. equity futures and gold moved sideways, before turning south as London markets opened. All hell broke loose around the U.S. trading session, as equity indices and Treasury yields pulled slightly higher before dropping again while gold appeared to regain some of its safe-haven appeal.
Investors appeared to be on edge ahead of another press conference by U.S. President Trump, during which he announced a delay in tariffs on Canadian and Mexican products covered by the USMCA until April 2, signaling a major turn from his decision to impose the largest tariffs in a century just a couple of days back.
Not surprisingly, U.S. equity markets didn’t welcome this flip-flopping trade stance, leading the Nasdaq to close more than 2% lower while the S&P 500 index ended 1.31% in the red, with chipmakers and Tesla chalking up notable declines.
FX Market Behavior: U.S. Dollar vs. Majors:
Overlay of USD vs. Major Currencies Chart by TradingView
Volatility was elevated among major pairs early in the day, with some risk-on flows sparking gains in Japanese equities and pulling the safe-haven yen in opposite directions. USD/JPY eventually broke down from its consolidation towards the end of the Asian session, followed by USD/CHF, as market caution returned ahead of Trump’s press conference while traders remained wary of the dollar.
Other dollar pairs stayed in their wider than usual ranges, although EUR/USD also broke lower after the ECB decision. The central bank cut interest rates by 0.25% as expected, although growth forecasts were downgraded due to weaker export activity and trade uncertainty.
ECB head Lagarde’s press conference sounded more concerns, as she highlighted fragile consumer confidence and trade risks weighing on investment activity. Still, she reiterated that the central bank is not pre-committed to a specific easing path and their decisions remain data-dependent.
As for U.S. data points, the dollar seemed to have a mixed reaction to better than expected initial jobless claims and the downbeat trade balance. Traders seemed anxious ahead of Trump’s speech, during which he announced a delay in Canada and Mexico tariffs until April 2.
By session’s end, USD closed mixed, as it sustained losses versus safe-haven rivals JPY (-0.68%) and CHF (-0.82%) while closing lower against the Aussie (0.08%) and pound (0.13%).
Upcoming Potential Catalysts on the Economic Calendar:
- Chinese trade balance data coming up
- German factory orders at 7:00 am GMT
- Swiss SNB foreign currency reserves at 8:00 am GMT
- ECB head Lagarde’s speech at 9:30 am GMT
- U.S. non-farm payrolls report at 1:30 pm GMT
- Canada’s employment report at 1:30 pm GMT
- Fed Chairperson Powell’s speech at 5:30 pm GMT
- U.S. President Trump’s roundtable discussion at 6:30 pm GMT
It’s NFP Friday, ladies and gents!
Apart from this major market catalyst likely influencing Fed policy expectations and overall market sentiment, we’ll also be hearing from main man Powell himself a few hours later, followed by remarks from U.S. President Trump.
Watch out for strong volatility throughout the New York trading session, as markets could have sharp reactions to any jobs surprises, potentially shifting Fed rhetoric, and possibly a fresh batch of crypto-related announcements from Trump.
Don’t forget to check out our brand new Forex Correlation Calculator when taking any trades!