The coast was clear in terms of top-tier economic reports, but financial markets still whipsawed as Trump imposed then reversed tariffs on Canadian steel and aluminum products.
Commodities and crypto were able to sustain their rallies, but U.S. equity indices failed to make it back in the green by the end of the day.
Here’s a breakdown of the latest headlines in the past trading sessions:
Headlines:
- Japan Machine Tool Orders y/y for February 2025: 3.5% y/y (3.5% y/y forecast; 4.7% y/y previous)
- Australia NAB Business Confidence for February 2025: -1.0 (6.0 forecast; 4.0 previous)
- In a high-level meeting in Saudi Arabia, Ukraine presented a draft ceasefire plan and said it’s ready to accept the U.S. proposal for a 30-day truce with Russia
- U.K. BRC Retail Sales Monitor YoY for February 2025: 0.9% (2.3% forecast; 2.5% previous)
- U.K. Conference Board Leading Index read for January 2025: -0.3% m/m to 75.5
- U.S. NFIB Business Optimism Index for February 2025: 100.7 (102.0 forecast; 102.8 previous)
- U.S. JOLTs Job Openings for January 2025: 7.74M (7.5M forecast; 7.6M previous)
- In response to electricity surcharge plans by Ontario Premier Ford, U.S. President Trump announced 25% tariffs on Canadian aluminum and steel
- Ford and Trump later on withdrew their trade measures, following Ford’s meeting with U.S. Commerce Secretary Lutnick
Broad Market Price Action:
Dollar Index, Gold, S&P 500, Oil, U.S. 10-yr Yield, Bitcoin Overlay Chart by TradingView
Bearish vibes from the previous trading session carried over to early Asian market hours, before profit-taking took place and was eventually followed by a steady climb among risk assets.
WTI crude oil recovered above the $66.50 per barrel area while gold staged a gradual rally to the $2,920 area. Bitcoin also managed to find its way back above the $80K level as the market mood improved on easing geopolitical tensions.
As it turned out, Ukraine had a high-level meeting with U.S. officials and presented a draft ceasefire plan while President Trump mentioned that he will have a discussion with Russian President Putin within the week.
However, this positive sentiment was soon clouded by an electricity surcharge announcement by Ontario Premier Doug Ford, which then prompted Trump to impose a 25% tariff on Canadian steel and aluminum imports effective the next day. After a meeting with U.S. Commerce Secretary Lutnick, Ford agreed to withdraw the electricity surcharge, leading Trump to lift the tariff measures as well.
Investors didn’t seem too pleased by these developments, as U.S. stocks initially sold off sharply on another set of trade tensions then pulled higher after both parties conceded. Still, major indices retreated from key resistance levels, with the S&P 500 closing 0.61% in the red and the Nasdaq down 0.18%.
FX Market Behavior: U.S. Dollar vs. Majors:
Overlay of USD vs. Major Currencies Chart by TradingView
Dollar pairs struggled to find direction early in the day, as traders were likely holding out for bigger catalysts like the U.S. CPI release midweek.
A bit of a selloff was seen as London markets opened to some risk-taking while market watchers were keeping tabs on positive Russia-Ukraine updates. However, price action among the majors soon diverged, with USD showing weakness versus the euro and sterling while raking in some gains versus the yen and franc.
The U.S. JOLTS job openings report, which turned out stronger than expected at 7.74M versus 7.65M in January, did little to steer the Greenback in a particular direction since the official NFP reading was already printed last week.
Tariffs drama had a major impact on USD/CAD, though, as the Loonie sold off on Ontario Premier Ford’s threats to cut off electricity exports and Trump’s retaliatory 25% tariffs on Canadian aluminum and steel. A few hours later, the Canadian currency rebounded when both Ford and Trump backed up on their trade measures, leading USD/CAD to close near its daily open.
Upcoming Potential Catalysts on the Economic Calendar:
- ECB head Lagarde’s speech at 8:45 am GMT
- U.S. headline and core CPI at 12:30 pm GMT
- BOC monetary policy decision at 1:45 pm GMT
- BOC press conference at 2:30 pm GMT
- U.S. EIA crude oil inventories at 2:30 pm GMT
- U.S. 10-year bond auction at 5:00 pm GMT
- U.S. federal budget balance at 6:00 pm GMT
The spotlight could return to fundamentals later today, as the U.S. will be printing its February CPI figures while the BOC will announce its monetary policy decision.
Don’t forget that the BOC also has its presser a few minutes after rate statement, which could translate to even stronger volatility for the Loonie.
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