In the absence of any economic data during yesterday’s trading session, currency markets tracked the broad risk-off them, which saw the Nasdaq post its steepest loss for 2.5 years.
Worries over US growth saw bond yields fall sharply, and markets are now pricing in a 50% probability of an interest rate cut in May. Commodity currencies were hit hard, as was sterling versus the euro, which fell to a 6-week low after posting its biggest weekly loss in over 2 years.
News out of Germany that the Greens are calling for members to not back Merz’s spending plans dented the euro versus the dollar, but market participants still seem confident there is a deal to be done.
Elsewhere, the latest Retail Sales report from the BRC revealed a sharp slowdown in UK consumer spending in February with sales growing 1.1% year-on-year down from 2.6% in January.
*Daily move - against G10 rates at 7:30am, 11.03.25
** Indicative rates - interbank rates at 7:30am, 11.03.25
Markets have now retraced all of the popular Trump trade moves as tariff and growth fears ramp up. Recent weaker than expected economic data out of the US has cast doubt over US “exceptionalism”, causing USD index to trade down to a 4-month low. We now eagerly await tomorrow's US inflation data where markets are forecasting a slight decrease from last month’s headline numbers.
Elsewhere, tomorrow’s Bank of Canada interest rate decision hangs in the balance, with markets pricing the probability of a 0.25% chance at 50%.
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