JOLTS Job Openings, Volkswagen Earnings, Japan Capital Goods Price Index
The US dollar recovered moderately against most major currencies on Monday, with the USDX up by 0.23% on the iFOREX platform. Even though US job growth fell short of expectations on Friday, the dollar unexpectedly strengthened, recovering from a four-month low. However, persistent worries about the economic impact of the US administration's trade policies continue to weigh on the currency.
U.S. trade policies appear to be driving recession fears, triggering a global market downturn. Asian tech stocks declined with the Japan 225 down by 1.77% to hit its lowest level since mid-September 2024, while the Japan 100 that tracks the performance of the TOPIX index slid by almost 1.91% led by a sharp sell-off on Wall Street and particularly in the technology sector. A Reuters survey confirmed growing economic uncertainty in Mexico and Canada due to US tariffs, with rising inflation and recession risks forcing the Federal Reserve to likely delay any policy changes.
Looking ahead, quarterly earnings reports from Volkswagen, Adobe, and DocuSign are due later this week. Volkswagen, Europe's leading automaker, has forecast a minimal potential increase in its 2025 operating profit margin. This cautious prediction aligns with similar subdued outlooks from competitors, reflecting industry-wide challenges such as weak demand, elevated expenses, and ongoing trade disputes. The company projects an operating margin between 5.5% and 6.5%, closely mirroring the 5.9% achieved in 2024 and the consensus estimate of 6.1% from an LSEG survey.
On the cryptos front, the two largest cryptocurrencies by market capitalization, Bitcoin and Ethereum, extended decline on Tuesday, posting declines of 2.61% and 7.67% respectively on the iFOREX platform. Concerns about a potentially sharper-than-anticipated U.S. economic downturn have dampened investor confidence in risky assets. This unease intensified following comments made by U.S. President Trump during a Fox News 'Sunday Morning Futures' interview, where the possibility of a U.S. recession in the current year was not dismissed.
In the week ahead, focus could shift to inflation data from the U.S. in the form of CPI and PPI. Canada will announce its interest rate decision, and the U.K. will publish GDP numbers. Some price action could also be observed upon the release of the JOLTS Job Openings report later today and the preliminary consumer sentiment and inflation expectations reports due on Friday.
EUR/USD
The EUR/USD pair remained in familiar territory on Monday as traders brace for a data-heavy week from the US.
European economic data remains secondary this week, with investors focusing on crucial US releases. Tuesday brings JOLTS Job Openings, expected to rise to 7.75M from 7.6M, followed by CPI inflation data. Markets anticipate a slight cooling in inflation, with headline CPI expected to ease to 0.3% MoM from 0.5% and annual CPI dipping to 2.9% YoY.
Meanwhile, market sentiment remains cautious amid ongoing tariff concerns. The Trump administration’s push for tariffs on key trading partners is fueling uncertainty, with businesses facing higher costs. In a Fox News interview, Trump downplayed recession fears but later acknowledged potential economic challenges, shifting blame to the previous administration.
Investors remain on edge, awaiting inflation data that could shape Federal Reserve rate expectations in the coming months.
Gold
Gold prices dipped below $2,900 on Monday as selling pressure mounted ahead of the US trading session. Investors are weighing comments from President Donald Trump, who described the US economy as being in a “transition” phase during a Fox News interview. However, markets are already pricing in the possibility of a recession.
Meanwhile, Federal Reserve Chairman Jerome Powell reaffirmed a cautious stance before the Fed’s blackout period began. With the next policy decision set for March 19, Powell signaled that keeping interest rates steady is the preferred course, warning against preemptive rate changes that could lead to policy missteps.
With economic uncertainty looming and key data ahead, traders remain focused on the Fed’s next move and broader market sentiment.
WTI Oil
Oil prices fell more than 1% on Monday as fears of U.S. tariffs on Canada, Mexico, and China weighed on global economic outlooks and energy demand.
Market uncertainty has been fueled by President Donald Trump’s tariff policies, with Canada, Mexico, and China responding with retaliatory measures. Investors worry that escalating trade tensions could push the U.S. into a recession, further dampening oil demand.
On the supply side, OPEC+ plans to increase production in April but may reverse the decision if market imbalances arise. Meanwhile, Trump continues efforts to cut Iranian oil exports, while potential sanctions on Russia remain a wildcard for oil prices. Investors are now turning to upcoming reports from the International Energy Agency and OPEC for further market direction.
US 500
The US 500 fell more than 2% on Monday, with the US 30 losing more than 1.5% and the US Tech 100 sliding around 3.50%, as fears grew that President Donald Trump’s tariff policies could push the U.S. into a recession.
Investor sentiment took another hit after Trump, in a Fox News interview, declined to rule out a recession, calling current economic turbulence a “transition” phase. Meanwhile, markets are also reacting to political shifts in Canada, where former central banker Mark Carney won the Liberal Party leadership and criticized Trump’s trade actions.
Key economic data, including February’s Consumer Price Index (CPI), will be closely watched this week. CPI is expected to ease slightly to 2.9% YoY from 3.0%. Tech stocks, including NVIDIA and Tesla, led the market selloff, with Tesla dropping over 15%.
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