FOREX NEWS & BLOG

Here’s the Google trend on the topic of “recession” in the US:

Amid Trump’s tariffs and softer US economic data at the balance, we’re seeing an uptick in interest on recession risks. And it’s also feeding into the commentary from market analysts.

NAB is out earlier noting that “most safe-haven assets such as Treasuries and the yen are higher in the early Asian session amid growing fears of a US recession”. Adding that “headlines of recession risk rising (from low levels) abound”.

Meanwhile, MUFG’s title for their note today also highlights this: “Asian Currencies Mixed; US Recession Fears Weigh”.

Even if traders had been pricing in said risks over the past few weeks via a more dovish Fed outlook, never underestimate the power of the social media echo chamber.

As things stand, the echo we’re seeing and hearing is one of fear and that will make it challenging for risk trades to run against that backdrop.

The good thing in all of this is that people tend to move on quickly in this day and age. And the same applies to markets.

We’re now pricing in ~84 bps of rate cuts for the year by the Fed with odds of a May rate cut seen at ~59%. Is that a bit much considering the pivot away from just one rate cut priced in during the end of January? Is the Fed really going to be this dovish considering the recent data

Those are fairly interesting questions and we’ll have to wait on the US CPI report this week and the FOMC meeting next week to have a better idea of where this is all going.

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

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That will keep the focus and attention on the risk mood as we look to the session ahead. For now, things are calmer with US futures paring earlier losses to be marginally higher. But again, it’s still early in the day and Wall Street is a whole different beast as we saw in trading yesterday.

For one, the technicals are also not looking good for US stocks at the moment as seen here.

In FX, the dollar continues to hold rather mixed. The euro stays buoyed with eyes on the German debt brake reform, so even safety flows are not really leading to much downwards pull on EUR/USD. As for USD/JPY, the pair is now testing waters under 147.00 with eyes on the 145.00 mark next.

The greenback is at least holding its own against the commodity currencies, with USD/CAD recovering back above 1.4400 ahead of the US CPI report and Bank of Canada policy decision tomorrow. Meanwhile, AUD/USD is tracking lower back under 0.6300 amid the more dour risk mood.

Looking to the session ahead, there won’t be any notable releases in Europe with only the US NFIB small business optimism index on the agenda at 1000 GMT. As such, traders will continue to place their focus and emphasis on risk sentiment in the day ahead.

I wish you all the best of days to come and good luck with your trading! Stay safe out there.

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

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While there was a slight bounce late yesterday in Wall Street, it was still a very rough day for stocks. Tech shares bore the brunt of the pain, with the Nasdaq closing down by a whopping 4%. That tees up the likelihood of another down week, with this being the fourth weekly decline in a row pending. The technicals certainly aren’t looking good.

It’s perhaps a healthy correction of sorts after the unrelenting run higher since the AI bubble began. The break of the 100 and 200-day moving averages have led to the break of the key trendline support (white line) above as well.

The technical side of things suggests that there is more scope for the latest correction to run. But just be mindful that we’re already due for four straight weeks of declines in the Nasdaq. And typically, dip buyers will find some room to squeeze back in.

The last time we had four straight weekly losses in tech shares was back in July to August last year. But even then, that final stretch saw the Nasdaq close just 0.2% lower after having been down by as much as 6.4% during the week. So if you really want to track four painful weeks for the Nasdaq, you’ll have to go all the way back to the period of April to May 2022.

The confluence of factors are perhaps a good reason for stocks to shave some off the top and to “detox” as they are calling it now.

Trump’s tariffs, geopolitical uncertainty, softening US economic data, recession risks, AI competition from China, and overstretched valuations are just some reasons to point to.

Of course, there’s always the saying that the market can stay irrational longer than you can stay solvent. But I guess the naysayers do have something to shout about for the time being.

The corrective run we’re seeing points to the potential that stocks might not have it that easy of a time this year. However, as soon as the Fed put starts to come back in, I’m sure that will help to soothe markets somewhat down the road.

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

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• Republican Senator says Trump is ‘dug in’ on tariffs, ‘like a tick’
• Japan finance minister Kato says FX developments can affect people’s lives
• Bank of Finland Governor and ECB monetary policy maker Olli Rehn speaking Tuesday
• Citi downgrades US equites and upgrades China equities
• PBOC sets USD/ CNY central rate at 7.1741 (vs. estimate at 7.2597)
• Yen up, US equity indexes down – chicken, egg, dog, tail … bad session for risk again
• Japan’s Finance Minister Kato flags impact of rising rates, pledges stable bond issuance
• Japan Economy Minister Akazawa says FX should move stably, reflecting fundamentals
• Australian February business confidence to -1 (prior +5)
• UK Consumer Spending Slows in February Despite Record Household Confidence
• Japan Trade Minister Muto received no assurance Japan would be exempt from US tariffs
• Japan (final) Q4 2024 GDP +0.6% q/q (preliminary was +0.7%)
• Japan data – January Household Spending +0.8% y/y (vs. expected +3.6%)
• Australian data – Westpac Consumer Confidence (March) +4% (prior +0.1%)
• Bank of Canada’s rate decision on Wednesday is shaping up to be a tight call
• UK Treasury said there is “no plan” to introduce US-style Bitcoin reserves
• Australian weekly consumer confidence survey slumps again, to 86.9 (prior 87.7)
• Italy set to propose a European guarantee scheme aimed at unlocking up to €200 billion
• New Zealand data – Manufacturing sales volumes +1.1% q/q
• Delta Airlines cites softening domestic demand for flights, cuts outlook
• US politics – Trump making to calls to try to avert government shutdown
• UBS has cut its target price on Tesla (TSLA). To $225. This still seems very high?
• Economic calendar in Asia Tuesday, March 11, 2025 – Japan Q4 2024 GDP
• Trade ideas thread – Tuesday, 11 March, insightful charts, technical analysis, ideas
• Volatility index, VIX, continue to surge higher. Hits its highest since August 5 last year
• Stocks tumble but does bounce modestly into the close
• Forexlive Americas FX news wrap: Bloodbath in risk assets

The
yen initially continued to strengthen during the session, with
USD/JPY dropping to lows just under 146.60. The US 2 year yield hit
its lowest since October last year, while on the yen side JGB yields
held firm.

From
Japan we had plenty of data and comments:

• January
  household spending came in at +0.8% y/y, a bit, big miss on estimates
  of +3.6%
• Q4
  GDP was revised a little lower to +2.2%, from the preliminary
  blockbuster +2.8%
• Japan
  Economy Minister Akazawa says FX should move stably, reflecting
  fundamentals
• Japan’s
  Finance Minister Kato said FX developments impact people’s lives

The
upshot of all this is that after its early fall USD/JPY retraced back to briefly touch above 147.20. As I post its back straddling 147.00.

The
US recession narrative took further hold, sending US equity indexes
down once trade reopened on Globex. Like USD/JPY, we have had some
recovery retrace.

EUR/USD
had small gyrations only, net higher on the session. Italy is
proposing a European guarantee scheme aimed at unlocking up to €200
billion. More fiscal stimulus.

AUD,
CAD, NZD were all a littler more active, dipping early before also
retracing.

From
Australia today we had business confidence falling back back into
negative territory in February. The survey also contains a measure of
business conditions, which tends to be a more objective than the
sentiment driven confidence measure. Conditions improved slightly
higher.

While
analyst notes from banks come and go, the one from Citi (via a Bloomberg report) today drew
some attention. The bank downgraded US equities to neutral, while
boosting Chinese equities to overweight. On the day the news of the
note pretty much bottom-ticked US equity indices.

This article was written by Eamonn Sheridan at www.forexlive.com.

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