EUR: EUR/USD - Digesting Tariffs

• Following last week’s profit taking, gold’s rally resumed overnight as the threat of tariffs hung over markets.
• As President Trump’s deadline for tariffs draws near, markets sentiment was very weak with the S&P down heavily and bond yields rallying as much as 6bps.
• No surprise in that environment that gold rallied, with bullion up +1.2% on the day.
• Gold it rose steadily all day to finish the US trading session on its highs of $2,892.79.
• US data releases didn’t help to improve investor sentiment with ISM Prices Paid higher than expected whilst ISM Manufacturing softened.
• The weaker than expected data release adds to speculation of potential interest rate cuts by the Federal Reserve which is an additional boost to gold. 

ACGBs (YM +5.0 & XM +5.0) are stronger after US tsys finished 4-6bps richer, with the 5-10-year zone leading, after a mixed manufacturing survey and falling oil prices sparked investor concerns about slowing growth. The move left US tsy yields at new multi-month lows on Monday.

• The decline in US yields accelerated after President Donald Trump's remarks that “no room left for a deal on Canada, Mexico” ahead of Tuesday’s deadline weighed on markets.
• Earlier, Trump posted on Truth Social: “To the Great Farmers of the United States: Get ready to start making a lot of agricultural product to be sold INSIDE of the United States. Tariffs will go on external products on April 2nd. Have fun!”.
• Morning data showed a sharp rise in ISM Prices Paid, surging to 62.4 (consensus 56.0) from 54.9.
• Cash ACGBs are 5bps richer with the AU-US 10-year yield differential at +12bps.
• Swap rates are 5bps lower.
• The bills strip has bull-flattened, with pricing flat to +4.
• Today, the local calendar will see Q4 Current Account Balance and Net Exports of GDP, and January Retail Sales data alongside the RBA Minutes of the February Policy Meeting.

• NZD/USD closed +0.3% at 0.56174 ending a five-day losing streak, but the recovery is weak and the overall trend remains bearish after falling below the 20-day EMA to a mid-February low. Technical indicators, including a negative RSI and a bearish MACD crossover, signal ongoing selling pressure and a shaky rebound.
• NZD has underperformed most G10 currencies as the US imposes 20% tariffs on China
• The pair did trade up 0.73% during the US session before headlines starting coming out from Trump on imposing tariffs on China & saying time has run out for Canada & Mexico. We tested key support on Monday at 0.5600, briefly trading below it below ticking higher a clear break here would then open up a move to retest the Feb 3 lows of 0.5516. To the upside, a break above the overnight highs of 0.5640, would then open a move to 0.5695/.5705 (20-, 50-Day EMA) are seen as key resistance.
• New Zealand's home building approvals rose 2.6% m/m in January
• Expiries 0.5855 (NZD869.3m). Upcoming notable strikes: 0.5795 (NZD1.14b March 7), 0.6350 (NZD352.8m March 5), 0.6150 (NZD330m March 6)
• RBNZ dated-OIS is fully pricing in a 25bps cut in April, while there is about a 90% chance of a further 25bps cut priced for May up from about 70% mid last week, with a cumulative 76bps of cut priced by November, up from 64bps
• There is nothing else on the calendar today, tomorrow we have ANZ Commodity Price