Volatility was the name of the game, as markets reeling from global trade uncertainty got their hopes up for a 90-day pause in U.S. tariffs, which turned out to be fake news.
Here are the headlines you need to know:
Headlines:
- Japan Average Cash Earnings growth rate for February 2025: 3.1% y/y (2.9% y/y forecast; 2.8% y/y previous)
- Australia ANZ-Indeed Job Ads growth rate for March 2025: 0.4% m/m (0.9% m/m forecast; -1.4% m/m previous)
- Japan Leading Economic Index for February 2025: 107.9 (107.9 forecast; 108.3 previous)
- Germany Industrial Production growth rate for February 2025: -1.3% m/m (-1.2% m/m forecast; 2.0% m/m previous)
- Germany Balance of Trade for February 2025: 17.7B (17.4B forecast; 16.0B previous); Exports: 1.8% m/m (1.5% m/m forecast; -2.5% m/m previous); Imports: 0.7% m/m (0.6% m/m forecast; 1.2% m/m previous)
- U.K. Halifax House Price Index for March 2025: -0.5% m/m (0.2% m/m forecast; -0.1% m/m previous)
- EU official von der Leyen said they are open for a good trade deal but prepared to take counter measures otherwise
- Euro area Retail Sales for February 2025: 0.3% m/m (0.6% m/m forecast; -0.3% m/m previous); 2.3% y/y (2.1% y/y forecast; 1.5% y/y previous)
- BOC Business Outlook Survey for Q1 2025: significant worsening of business conditions; the economic environment has become highly unpredictable due to sudden shifts in U.S. trade policy; inflation expectations have risen
- Fake news circulated on a 90-day pause in U.S. tariffs being considered by economic adviser Kevin Hassett
- U.S. President Trump clarified they are not considering a pause in tariffs and are even looking into additional tariffs on China if they don’t withdraw retaliatory measures
- U.S. Consumer Credit Change for February 2025: -0.81B (15.0B forecast; 18.08B previous)
- S&P 500 index entered technical bear market after closing more than 20% lower from its February highs
- FOMC official Kugler acknowledged that inflation expectations moved higher but only in the short-term
Broad Market Price Action:
Dollar Index, Gold, S&P 500, Oil, U.S. 10-yr Yield, Bitcoin Overlay Chart by TradingView
It was indeed “Black Monday” in the financial markets, as investors continued to deal with the fallout from last week’s “Liberation Day” announcements and reciprocal tariffs from U.S. trade partners.
Risk assets like crude oil, crypto and equities gapped down, with Japan’s Nikkei index closing 8% in the red while Chinese stock markets also suffered a major bloodbath. The mood was no better in Europe, as indices also started on the back foot, with the DAX kicking the session off 10% lower while the FTSE wound up with 4.38% in losses.
Later on, market watchers caught wind of rumors of a 90-day pause in U.S. tariffs reportedly being considered by economic adviser Kevin Hassett, causing a sharp rally in U.S. equities. However, these were quickly denied by the White House, with Trump even doubling up in saying that they are looking into more tariffs on China unless they withdraw their countermeasures.
Not surprisingly, U.S. stock markets took a nasty tumble afterwards, putting the S&P 500 index back in bear market territory before it managed to trim its losses by session’s end. Interestingly enough, gold shed more of its safe-haven gains during the New York session, causing the precious metal to close 1.72% lower.
FX Market Behavior: U.S. Dollar vs. Majors:
Overlay of USD vs. Major Currencies Chart by TradingView
Price action in the forex arena was also pretty volatile for the day, with USD/JPY and USD/CHF gapping down over the weekend, while the dollar caught early gains against the Aussie and Kiwi as risk aversion remained strongly in play.
Only mid-tier data points were released, as Germany printed downbeat industrial production and trade figures, further clouding the growth outlook in the region. Dollar pairs also tossed and turned when rumors of a 90-day pause in U.S. tariffs broke out, before Trump later on dismissed those as “fake news.”
AUD/USD and NZD/USD resumed their slump to create fresh intraday lows after the bout in volatility while USD/JPY carried on with its climb to end 0.51% higher. The dollar wound up mostly higher against its peers, except against the franc (-0.32%) and Canadian dollar (-0.05%).
Upcoming Potential Catalysts on the Economic Calendar:
- Australia Westpac Consumer Confidence Index at 12:30 am GMT
- Australia NAB Business Confidence at 1:30 am GMT
- Japan Eco Watchers Survey Outlook at 5:00 am GMT
- France Balance of Trade at 6:45 am GMT
- ECB official Guindos’ speech at 9:00 am GMT
- U.S. NFIB Business Optimism Index at 10:00 am GMT
- Canada Ivey PMI at 2:00 pm GMT
- Fed official Daly’s speech at 6:00 pm GMT
- U.S. API Crude Oil Stock Change at 8:30 pm GMT
There’s not much in the way of top-tier economic releases for the day, except for Canada’s Ivey PMI during the U.S. session, so markets could remain extra sensitive to tariffs-related headlines that tend to cause huge swings in overall market sentiment.
As always, stay nimble and don’t forget to check out our brand new Forex Correlation Calculator when taking any trades!