MNI EUROPEAN OPEN: USD Firms Amid Tariff Concern
EXECUTIVE SUMMARY
- TRUMP SOWS CONFUSION ON TARIFFS FOR CANADA & MEXICO, FLOATS 25% DUTY ON EU GOODS - RTRS
- NVIDIA GIVES ‘UNDERWHELMING’ REPORT AFTER TWO YEARS OF BLOWOUTS - BBG
- FED’S BOSTIC SAYS RATES SHOULD STAY WHERE THEY ARE - MNI BRIEF
- FORMER RBA STAFFERS SHARE THEIR CASH RATE OUTLOOK - MNI
Fig 1: USD BBDXY Index Outperforming Softer US Yield Backdrop
Source: MNI - Market News/Bloomberg
UK
BOE (MNI BRIEF): “Bank of England Monetary Policy Committee member Swati Dhingra on Wednesday highlighted the diverse effects from US tarifff increases on consumer prices and she downplayed the risks of a persistent inflationary impact.
UKRAINE (BBC): “Sir Keir Starmer has reiterated his call for a US security guarantee in Ukraine to deter Vladimir Putin from invading again, as he prepares to meet Donald Trump.”
POLITICS (BBC): “Tulsi Gabbard, the director of US National Intelligence, says she was not informed in advance about the UK government's demand to be able to access Apple customers' encrypted data from anywhere in the world.”
EU
UKRAINE (BBC): “Ukrainian President Volodymyr Zelensky will meet US President Donald Trump in Washington on Friday to sign an agreement on sharing his country's mineral resources, Trump has said. Zelensky has described the bilateral deal as preliminary, and said he wants further agreements which include US security guarantees to deter renewed Russian aggression.”
UKRAINE (POLITICO): “French President Emmanuel Macron was unable to get concrete reassurances from United States President Donald Trump on American security guarantees for Ukraine when at the White House this week, according to European Union officials and diplomats.”
EU (ECONOMIST): “A packed agenda awaits Ursula von der Leyen, the president of the European Commission, when she arrives in Delhi on Thursday. During her two-day trip she hopes to improve co-operation with India, which she describes as one of the EU’s “most trusted friends and allies”.
RUSSIA (ECONOMIST): “From Thursday American firms are forbidden from providing services to petroleum plants in Russia. The ban is part of a big package of sanctions the Biden administration announced on January 10th which also blacklisted more than 180 vessels and some firms that facilitate Russia’s oil trade. So far their effect has been muted.”
US
TARIFFS (RTRS): “U.S. President Donald Trump on Wednesday raised hopes for another month-long pause on steep new tariffs on imports from Mexico and Canada, saying they could take effect on April 2, and floated a 25% "reciprocal" tariff on European cars and other goods. A White House official, however, said Trump's previous March 4 deadline for the 25% tariffs on Mexican and Canadian goods remained in effect "as of this moment," pending his review of Mexican and Canadian actions to secure their borders and halt the flow of migrants and the opioid fentanyl into the U.S.”
TECH (BBG): “Nvidia Corp., the chipmaker at the center of an AI spending boom, delivered good-but-not-great quarterly numbers on Wednesday, drawing a muted response from investors accustomed to blowout results.”
FED (MNI BRIEF): Federal Reserve Bank of Atlanta President Raphael Bostic said Wednesday monetary policy should stay restrictive to bring inflation back to target. "We need to stay where we are and let's see where the world is," he told a Urban Land Institute conference. Monetary policy is restrictive and "mildly" causing the economy to slow in order to bring inflation back to 2%, he said. (See: MNI: Fed In Holding Pattern As Inflation To Stay High-Ex-Staff)
FED (MNI POLICY): The Federal Reserve plans to keep reducing its balance sheet until market signals show reserves are transitioning from abundant to ample levels, though it may slow or pause this process while Congress negotiates a deal to raise the debt limit.
GOVERNMENT (RTRS): “U.S. President Donald Trump's administration on Wednesday ordered federal agencies to undertake more large-scale layoffs of workers, while the president let downsizing czar Elon Musk take a star role at his first cabinet meeting and discuss his ambitious budget-cutting targets.”
OTHER
JAPAN (BBG): “Japan’s top currency official on Wednesday indicated he had no issue with growing market expectations over Bank of Japan interest-rate hikes, which this week helped send the yen to a four-month high.”
AUSTRALIA (MNI): Former RBA staffers and economists share their cash rate outlook On MNI Policy MainWire now, for more details please contact sales@marketnews.com.
CHINA
PRIVATE SECTOR (SHANGHAI SECURITIES NEWS): “Central government departments and local governments have held meetings and issued statements supporting the private sector after President Xi Jinping hosted a private enterprises symposium last week, reports Shanghai Securities News in a front-page article.”
YUAN (YICAI): “China’s currency will likely fluctuate between 7.0 and 7.5 against the U.S. dollar this year as the economy stabilises, despite President Donald Trump’s immigration and tax policies driving up dollar strength, said Zhang Peng, a postdoctoral fellow at the Institute of Finance of the Chinese Academy of Social Sciences.”
HOUSING (SECURITIES TIMES): “Local and central governments should cooperate to introduce additional support measures to stabilise the housing market further as early as possible, Securities Times reported, citing analysts.”
CHINA MARKETS
MNI: PBOC Net injects CNY90 Bln via OMO Thursday
MNI (BEIJING) - The People's Bank of China (PBOC) conducted CNY215 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net injection of CNY90 billion after offsetting the maturity of CNY125d billion today, according to Wind Information.
- The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 2.2833% at 09:55 am local time from the close of 2.2386% on Wednesday.
- The CFETS-NEX money-market sentiment index, measuring interbank money-market liquidity, closed at 45 on Wednesday, the same as the close Tuesday. A higher reading points to tighter liquidity condition, with 50 representing an equilibrium.
MNI: PBOC Sets Yuan Parity Higher At 7.1740 Thurs; -0.77% Y/Y
MNI (BEIJING) - The People's Bank of China (PBOC) set the dollar-yuan central parity rate higher at 7.1740 on Thursday, compared with 7.1732 set on Wednesday. The fixing was estimated at 7.2570 by Bloomberg survey today.
MARKET DATA
AUSTRALIA Q4 BUSINESS INVESTMENT -0.2% Q/Q; EST. +0.5%; Q3 +1.6%
AUSTRALIA Q4 PLANT/MACHINERY CAPEX -0.8% Q/Q; Q3 +1.3%
AUSTRALIA Q4 BUILDING CAPEX +0.2% Q/Q; Q3 +1.9%
NEW ZEALAND ANZ FEB. BUSINESS OWN ACTIVITY OUTLOOK 45.1; JAN. 45.8
NEW ZEALAND ANZ FEB. BUSINESS CONFIDENCE 58.4; JAN. 54.4
MARKETS
US TSYS: Tsys Futures Slip Ahead Of GDP & Fed Speak
- Tsys futures are trading lower today, as investors look to position ahead of tonight GDP data. TY recent traded through key resistance at 110-20, the 76.4% retracement of the Dec 3 - Jan 13 bear leg, the contract last trades -05+ at 110-21+, while TU is -00⅝ at 103-02⅜.
- Nvidia earnings were out this morning, the results were somewhat underwhelming, however the stock managed to close up 3.67% in after hours trading.
- Cash tsys yields are trading a touch cheaper today with curves slightly steeper. The 2yr is 1.2bps at 4.084%, while the 10yr is +1.9bps at 4.275%.
- Projected rate cuts through mid-2025 have firmed up from morning levels (*) as follows: Mar'25 at -0.7bp (-0.5bp), May'25 at -6.9bp (-6.4bp), Jun'25 at -21.5bp (-19.6bp), Jul'25 at -29.6bp (-27.6bp).
- Later today we have GDP, PCE, Durable Goods & Jobless Claims. While speeches from Fed officials such as Jeffrey Schmid, Michael Barr and Michelle Bowman are also expected
JGBS: Futures Down But Up From Lows, Tokyo CPI In Focus Tomorrow
JGB futures sit at 139.43, -.29 versus settlement levels in latest dealings. We are slightly up from session lows (139.27), but have had a mostly downside bias for much of the session.
- There has been negative spillover from lower US Tsy futures, (TYH5 off -06), but JGBs have generally underperformed.
- In the cash JGB space, yields are up over 3bps for some parts of the curve, led by the 7 and 10yr tenors. In comparison US Tsy yields are up a little under 2bps at this stage. The 10yr JGB outright is back to 1.40%, session highs rest at 1.416%.
- The 2yr debt auction printed a while ago, with softer demand metrics. The bid to cover ratio slipped to 3.16 from 4.06 prior. This is the worst bid to cover ratio since end 2023. The tail yield was 0.8330%, which compares to the current benchmark of 0.82%.
- Carry over from comments made yesterday from Japan's top currency official, Atsushi Mimura, that there is no push back on the market view for further BoJ rate hikes, may have also aided yields today.
- US-JP 10yr yield differentials sit back at +287bps, off nearly 45bps since the start of the month.
- Tomorrow the data calendar is busy headlined by Tokyo CPI.
BONDS: ACGBs Trade Richer, Curve Flattens
ACGBs (YM +1 & XM +2) are stronger and trade in the middle of the session's ranges.
- Today, the local calendar has been light, we had Private capital expenditure, that came in at -0.2% for 4Q, with 3Q numbers being revised up to 1.6% from 1.1%, however this did little to move markets.
- Australia sold A$150m of inflation-linked bonds due Aug 2035. Investors offered to buy 3.41 times the amount of securities sold.
- RBA Deputy Governor Andrew Hauser signaled that under the new monetary policy committee regime, the central bank is unlikely to disclose individual board votes to avoid adding "noise" around rate decisions. Public speeches by members will likely reflect the board's consensus rather than personal views. Hauser also reaffirmed that the RBA remains cautious on rate cuts, diverging from market expectations of a steady easing cycle.
- Cash US tsys are 1-2bps cheaper in today’s Asia-Pac session after yesterday’s gains, curves are steeper, with the 2s10s +0.5bps at 18.726, just off recent lows of 16bps.
- Cash ACGBs are outperforming US Tsys & NZGBS today, trading flat to 2.5bps richer with the AU-US 10-year yield differential at +6.5bps.
- Swap rates are 1bps higher.
- The bills strip is little changed today
- Tomorrow, the local calendar will see January's Private Sector Credit MoM. The market expects it to decrease to 0.5% from 0.6%
- The AOFM plans to sell A$700mn of the 1.75% 21 November 2032 bond tomorrow
BONDS: NZGB Curve Steepens, Business Confidence Rises
NZGBs closed mostly cheaper, the short-end outperforming as the curve bear-steepens. NZ Treasury sold NZ$225m 2029, NZ$225m 2033, NZ$30m 35 (linkers) & NZ$50m 2041 bonds today, while NZ business confidence increases in Feb.
- Today’s weakness appears tied to cash US tsys, which are 1-2bps cheaper in today’s Asia-Pac session after yesterday’s gains.
- NZGBs closed -1.4bps to +1.8bps. Short end outperformed today, with the 2yr -1.4bps at 3.644%, while the 10yr closed +1.4bps at 4.490%. The 5s10s closed +1.1bps at 38.50
- Nevertheless, NZGBs have underperformed US tsys recently, although the NZ-US 10-year yield differential is little changed from yesterday.
- Swap rates are mixed closing +/- 1bps
- RBNZ-dated OIS pricing was steady today. Currently, 26bps of easing is priced for April, with a total of 65bps expected by November 2025.
- New Zealand business confidence increased in February 2025 to 58.4 from 54.4 in January, supported by lower interest rates. While past activity weakened to -2.9 from 0.2, it remained better than six months prior, and export and investment intentions rose to 17.9 and 18.1, respectively, led by agriculture. Profit expectations dipped slightly to 22.3, with agriculture most optimistic, and inflation expectations softened to 2.5% from 2.7%.
- RBNZ reported January new residential mortgage lending at NZ$5.1b, up 50% YoY but down 11% MoM seasonally adjusted. First-home buyers accounted for NZ$1.04b (20.2%), rising 26% YoY, while investors borrowed NZ$1.15b (22.5%), surging 90% YoY. The number of new mortgage commitments rose 37% YoY to 14,122.
- Tomorrow we have ANZ Consumer Confidence, and Filled jobs
FOREX: USD Index Firms Amid Fresh Tariff Threats, Yen Marginally Outperforms
The USD BBDXY index has ticked up to 1288.5, a modest 0.15% gain. Still, the technical picture for this index looks a little less adverse than it did at the start of the week. The USD is up against all of the G10 currencies, and also firmer against all of the Asian currencies as well.
- The US Wednesday session was buffeted by various tariff headlines from Trump and administration officials. In the wash up tariff announcements on Mexico and Canada could still take place next week, after earlier Trump remarks pointed to a delay. Trump also had strong rhetoric against the EU, proposing a 25% tariff.
- EUR/USD is off around 0.20%, last near 1.0465. EU equity futures are off close to 0.60% for Euro Stoxx.
- Higher beta plays are off 0.25-0.30%, with AUD and NZD slightly underperforming the rest of the G10. AUD/USD was last just under 0.6290, off 0.25%, which is fresh lows back to mid Feb. NZD/USD is near 0.5680, also around multi week lows.
- The A$ looked through RBA Deputy Governor Hauser’s comments before the Senate Economics Committee, which were in line with the February meeting statement and Governor Bullock’s press conference. Q4 Capex in Australia was weaker than forecast, pointing to a drag on GDP growth.
- USD/JPY has been supported below 149.00, with lows of 148.75. We have seen US yields tick higher, but JGB yields are also higher, biasing US-JP yield differentials lower. Yen is marginally outperforming the G10.
- US equity futures are lower for the Nasdaq, as the market digested the Nvidia result earlier. Headline earnings were better than forecast but this hasn't boosted aggregate sentiment.
- Later the Fed’s Barkin, Schmid, Barr, Bowman, Hammack and Harker all speak. Revised Q4 US GDP, preliminary January orders, jobless claims, February Kansas Fed manufacturing, euro area February EC survey, preliminary February Spanish CPI and ECB January meeting accounts are published.
ASIA STOCKS: Asia Equities Fall Following Tariff Talk & Nvidia Earnings
Asian equities are mostly lower today as investors reacted to Trump’s latest tariff announcements and disappointing earnings from Nvidia. Trump’s proposed 25% tariffs on the EU and delayed levies on Mexico and Canada, set for April 2, has seen volatility increase, while Nvidia’s lackluster results and warnings of tighter margins amid its Blackwell chip rollout failed to reassure markets. Equity indexes in China, Hong Kong, South Korea, Taiwan & fell, European futures slid 0.9%, and the USD strengthened, buoyed by tariff news while Bitcoin dropped to $84,000.
- HK & Chinese stockers are struggling today with the HSI down 1.05% and the HSTech Index down 2.50% after a tech-driven rally pushed benchmarks to multi-year highs yesterday. Major tech firms like Alibaba, Tencent, and Meituan saw declines. On the mainland, the CSI 300 and Shanghai Composite indices slipped 0.2% and 0.4%, respectively, as investors shifted focus to Chinese stocks amid U.S. tariff fears under President Trump, which raised concerns about inflation and growth.
- Japanese equities are mixed, with the tech heavy Nikkei slipping 0.10%, while the broader TOPIX trades 0.35% higher. Consumer Staples & Healthcare stocks are the worst performing sectors
- South Korea's KOSPI is trading -1.10% with Samsung & SK Hynix both slightly lower, with the 2.5% climb in the SOX overnight doing little to help the stocks today. Taiwan's TAIEX is -0.75% lower.
- Australia's ASX200 is trading 0.20% higher, with consumer Staples & Material stocks leading the way today, while New Zealand NZX 50 is the top performer in Asia today, up 0.75%.
OIL: Crude Range Trading As Outlook Clouded, Fed Speakers Later
Oil prices have traded in a very narrow range during today’s APAC session holding onto the week’s losses as markets remain worried about the impact of protectionism on global demand. WTI is up 0.1% to $68.71/bbl after falling to $68.68 and then rising to $68.90. Brent is 0.3% higher at $72.75/bbl after a low of $72.65 and a high of $72.84. The USD index is up 0.2% and pressuring dollar-denominated crude.
- US President Trump said that tariffs on imports from Canada and Mexico will still go ahead. He also attacked European trade practices and has threatened 25% tariffs on imports from the EU. Deadlines have changed and it remains unclear when they will be imposed with the details also uncertain.
- Uncertainty around trade policy is believed to have weighed on a number of recent US confidence surveys.
- While markets are currently focussed on the demand outlook, supply trends are also significantly clouded by sanctions and production goals. It appears very premature to expect increased Russian energy exports from a relaxing in sanctions following a Ukraine peace deal. Ukrainian President Zelensky is scheduled to meet Trump on Friday.
- Later the Fed’s Barkin, Schmid, Barr, Bowman, Hammack and Harker all speak. Revised Q4 US GDP, preliminary January orders, jobless claims, February Kansas Fed manufacturing, euro area February EC survey, preliminary February Spanish CPI and ECB January meeting accounts are published.
GOLD: Softer Backdrop As USD Firms
As confusion abounds on what happens next for tariffs, Gold took a breather today with some investors taking profit. We were last sub $2900 (near $2896), off around 0.70% from end Wednesday levels in the US ($2916.39). The 20-day EMA is back close to $2882.5.
- The USD is better bid, along with firmer US tsy yields, additional headwinds for bullion. Trump headlines from Wednesday suggested a possible delay to tariff announcements for Canada and Mexico next week, although the White House later stated no such decision has been made. US Commerce Secretary Lutnick also reiterated the April 2 date for reciprocal tariffs.
- Indonesia’s President Prabowo has indicated that the country is expecting to boost gold reserves in a growing theme amongst Central Banks globally.
- As South East Asia’s largest gold producer announced that state owned bank PT Bank Syariah Indonesia will open gold banking services in a bid to bring into the financial sector the estimated 1,800 tonnes of gold held privately in the country.
- Gold has gained in every trading week in 2025 but if this week’s current trend continues has the potential to deliver its first weekly decline of the year.
UP TODAY (TIMES GMT/LOCAL)
| Date | GMT/Local | Impact | Country | Event |
| 27/02/2025 | 0745/0845 | ** |  FR | PPI |
| 27/02/2025 | 0800/0900 | ** |  SE | Economic Tendency Indicator |
| 27/02/2025 | 0800/0900 | *** |  ES | HICP (p) |
| 27/02/2025 | 0800/0900 | *** |  CH | GDP |
| 27/02/2025 | 0900/1000 | ** |  EU | M3 |
| 27/02/2025 | 0900/1000 | ** |  IT | ISTAT Consumer Confidence |
| 27/02/2025 | 0900/1000 | ** | IT | ISTAT Business Confidence |
| 27/02/2025 | 1000/1000 | ** |  GB | Gilt Outright Auction Result |
| 27/02/2025 | 1000/1100 | * | EU | Consumer Confidence, Industrial Sentiment |
| 27/02/2025 | 1230/1330 | EU | Publication of MonPol Meeting Account | |
| 27/02/2025 | 1330/0830 | * |  CA | Current account |
| 27/02/2025 | 1330/0830 | * | CA | Payroll employment |
| 27/02/2025 | 1330/0830 | *** |  US | Jobless Claims |
| 27/02/2025 | 1330/0830 | ** | US | WASDE Weekly Import/Export |
| 27/02/2025 | 1330/0830 | ** | US | Durable Goods New Orders |
| 27/02/2025 | 1330/0830 | *** | US | GDP |
| 27/02/2025 | 1415/0915 | US | Kansas City Fed's Jeff Schmid | |
| 27/02/2025 | 1500/1000 | ** | US | NAR Pending Home Sales |
| 27/02/2025 | 1500/1000 | US | Fed Governor Michael Barr | |
| 27/02/2025 | 1530/1030 | ** | US | Natural Gas Stocks |
| 27/02/2025 | 1600/1100 | ** | US | Kansas City Fed Manufacturing Index |
| 27/02/2025 | 1630/1130 | * | US | US Bill 08 Week Treasury Auction Result |
| 27/02/2025 | 1630/1130 | ** | US | US Bill 04 Week Treasury Auction Result |
| 27/02/2025 | 1645/1145 | US | Fed Governor Michelle Bowman | |
| 27/02/2025 | 1815/1315 | US | Cleveland Fed's Beth Hammack | |
| 27/02/2025 | 2015/1515 | US | Philly Fed's Pat Harker | |
| 28/02/2025 | 2330/0830 | ** |  JP | Tokyo CPI |
| 28/02/2025 | 2350/0850 | ** | JP | Industrial Production |
| 28/02/2025 | 2350/0850 | * | JP | Retail Sales (p) |
| 28/02/2025 | 0700/0800 | *** | SE | GDP |
| 28/02/2025 | 0700/0800 | ** | SE | Retail Sales |
| 28/02/2025 | 0700/0800 | ** |  DE | Import/Export Prices |
| 28/02/2025 | 0700/0800 | ** | DE | Retail Sales |
| 28/02/2025 | 0700/0700 | GB | BOE's Ramsden speech on MonPol in geopolitical fragmentation | |
| 28/02/2025 | 0700/0700 | * | GB | Nationwide House Price Index |
| 28/02/2025 | 0730/0830 | ** | CH | Retail Sales |
| 28/02/2025 | 0745/0845 | *** | FR | HICP (p) |
| 28/02/2025 | 0745/0845 | ** | FR | Consumer Spending |
| 28/02/2025 | 0745/0845 | *** | FR | GDP (f) |
| 28/02/2025 | 0800/0900 | ** | CH | KOF Economic Barometer |
| 28/02/2025 | 0855/0955 | ** | DE | Unemployment |
| 28/02/2025 | 0900/1000 | *** | DE | North Rhine Westphalia CPI |
| 28/02/2025 | 0900/1000 | *** | DE | Bavaria CPI |
| 28/02/2025 | 0900/1000 | ** | EU | ECB Consumer Expectations Survey |
| 28/02/2025 | 0900/1000 | *** | DE | Baden Wuerttemberg CPI |
| 28/02/2025 | 1000/1100 | *** | IT | HICP (p) |
| 28/02/2025 | 1300/1400 | *** | DE | HICP (p) |
| 28/02/2025 | 1330/0830 | *** | CA | GDP - Canadian Economic Accounts |
| 28/02/2025 | 1330/0830 | *** | CA | Gross Domestic Product by Industry |
| 28/02/2025 | 1330/0830 | *** | CA | CA GDP by Industry and GDP Canadian Economic Accounts Combined |
| 28/02/2025 | 1330/0830 | *** | US | Personal Income and Consumption |
| 28/02/2025 | 1330/0830 | ** | US | Advance Trade, Advance Business Inventories |
