Hope Dashed, Risk Appetites Slashed Ahead of Long Holiday Weekend for Many snbchf.com

by
Marc Chandler
My articles My offer My site About me My videos My books
Follow on:LinkedIN Twitter Seeking Alpha Amazon

Hope Dashed, Risk Appetites Slashed Ahead of Long Holiday Weekend for Many

President Trump’s national address seemed to contain little more than a reading of some of his recent social media posts. The market was eager for some sign of confirmation of its hope that had buoyed the capital markets in the last couple of sessions. It found none. The threat of escalating attacks while reiterating that the US military operation can wind down in the next two-three weeks failed to underpin sentiment ahead of what will be a long holiday weekend for many.

Risk appetites have been squashed. Equities and bonds have tumbled. The US dollar has surged. The Trump administration is likely to be disappointed with the market’s reaction, and some damage control may be attempted today, but ahead of the long weekend, which begins tomorrow for many financial centers, some of which will remain closed on Monday as well, it be difficult to rebuild the animal spirits. Fear now overwhelms hope that had held center stage for the past couple of sessions.

Prices

G10

• The euro stalled yesterday ahead of the last week’s highs in the $1.1630-40 area. Short-term players may have cut their longs after a 1.5-cent rally in two sessions, ahead of President Trump’s address. The retreat extended about $1.1515 today, which meets a retracement target of this week’s recovery from around $1.1445. Nearby support by be in the $1.1485-$1.1500 area. Note that options for 720 mln euros at $1.1513 and 2 bln at $1.1500 expire today.

• From Monday’s high to yesterday’s low, the dollar fell about 1.35% against the Japanese yen. This breaks the one-way market that Japanese officials commented on the dollar climbed four days in a row last week. The risk-off and jump in US yields have helped lift the greenback to almost JPY159.75 today, and once again JPY160 comes into view. Options for nearly $1.5 bln struck there expire today. Initial support is seen in the JPY159.35 area.

• Sterling peaked 1/100 of cent below last Friday’s high yesterday, according to Bloomberg’s pricing. After poking barely above $1.3345, sterling slipped back below $1.3300. It has been sold slightly through $1.3200 today. The four-month low was recorded on Tuesday, near $1.3160. The intraday momentum indicator oversold. Nearby resistance is seen in the $1.3240-50 area.

• The US dollar peaked against the Canadian dollar on Tuesday a little above CAD1.3965 and was sold to almost CAD1.3870 yesterday. It made a marginal new low today before it was pushed above yesterday’s high shy of CAD1.3920. The week’s high was recorded on Tuesday (~CAD1.3965). Above there, resistance is seen in the CAD1.4000-20 area.

• The Australian dollar extended its recovery from around $0.6835 on Monday and Tuesday to a little more than $0.6960 yesterday. The upside momentum faded, and the Aussie dipped below $0.6915 in late dealings in North America. It was sold to $0.6865 today. A break may spur at re-test on the week’s low. Stronger support is seen closer to $0.6800, where options for nearly A$1.2 bln expire today.

• The Mexican peso had a good day yesterday. The US dollar traded below the 20-day moving average against the peso for the first time in nearly a month (~MXN17.8165 today). It failed to settle below it and straddled the MXN17.85 area in late dealings. It has returned to almost MXN17.96 today. Latam currencies accounted for four of the best performing emerging market currencies yesterday. The Brazilian real’s 0.45% gain did not make the cut. The Argentine peso did not but for a different reason. Its 0.65% loss yesterday gave it the distinction of being the weakest currency in the world.

• The dollar was pressed to its lowest level in about three weeks yesterday against the offshore yuan, almost CNH6.87. It recovered to sightly above the mid-point of the session’s range in the North American afternoon around CNH6.88. The greenback has steadily climbed to a little above CNH6.90 after the initial quiet start in the local session. The PBOC set the dollar’s reference rate lower for the third consecutive session today (CNY6.8880 vs. CNY6.9025 yesterday). It was the second consecutive session of an outside reduction of more than 0.20% adjustment, which is the largest two-day move since September 2024.

• The Indian rupee soared around 1.85% today, its biggest advance since 2013 as the central bank intensified capital controls that spurred a powerful short squeeze. Banks were prohibited from offering some non-deliverable forward rupee contracts to residents and non-residents. A measure of volatility jumped to six-year highs, which in turn prompted the central-bank supervised clear house to boost margin requirements for forwards, which further squeezed the market. The dollar settled near INR94.8325 before the two-day holiday and is now around INR93.1050, having fallen to almost INR92.8260.

Other Markets

• The hope that had lifted equities in recent days was questioned after President Trump’s address. Asia Pacific equities tumbled with most large bourses off 1-2%. Hong Kong was down a little less, while South Korea’s Kospi was tagged for almost 4.5%. India’s equities are bucking the trend and are holding small gains in late turnover. Europe’s Stoxx 600 is snapping a three-day advance of almost 4% and is off a little more than 1% in late morning turnover. US index futures are off around 1.0%-1.5%.

• Benchmark 10-year yields are jumping higher today. A weak reception at Japan’s 10-year bond auction saw yields rise as much as nine basis points today. European 10-year yields are 3-7 bp higher and the 10-year Treasury yield is up about four basis points to poke above 4.36%.

• Gold’s recovery was initially extended to $4800 today to fray the 20-day moving average for the first time in three weeks. It was sold to almost $4555 before finding bids. It stalled near $4650 in early European turnover. Silver held below its 20-day moving average (~$76.35) and was sold to slightly below $69.70. It has stabilized to staddle the $71 area in the European morning.

• May WTI opened near $99 today and initially slipped to $97.50 before hope faded. The contract reached slightly above $108, the highest price since the peak on March 9 (~$113.40). June Brent briefly traded below $100 and then reached almost $109.20. Tuesday’s high was closer to $110 and the war-high was recorded on March 19, a little above $112.

Data

• US Challenger job cuts and the weekly jobless claims play second fiddle today ahead of tomorrow’s March jobs report. February’s trade data gets the spotlight. It will help economists forecast Q1 GDP, which the Atlanta Fed says is tracking 2%. Liberation Day came and went, and the US 2025 trade deficit was little changed from 2024, almost $912 bln, even if the composition shifted away from China. Still, note that in the three months through January 2026, the US trade shortfall was about $184 bln compared with $305 bln in the three months through January 2025. Imports are seen slipping for the second consecutive month. Imports were virtually flat last year, while exports rose by an average of 0.5% a month. After jumping 5.5% in January, exports are expected to have fallen by around 2.3% in February. St. Louis Fed President Musalem and Chicago Fed President Goolsbee address monetary policy today, while Governor Barr discusses AI and consumer issues.

• Canada reports its February merchandise trade balance today. As we have noted, there was sharp deterioration last year. The goods trade deficit swell to C$31.6 bln in 2025 from almost C$7.2 bln in 2024. It ran a C$7.5 bln deficit in the three months through January compared with a C$4.6 bln surplus in the three months through January 2025. The broader measure of trade, the current account, saw the deficit widen to 0.9% of GDP last year from 0.5% in 2024.

• Australia reported its February goods trade earlier today. It widened dramatically to A$5.68 bln from A$2.26 bln in January and A$2.7 bln in February 2025. Exports surged 4.9% (after falling a revised 1.6% in January, which was initially reported as a 0.9% decline). Imports fell by 3.2% in February (after rising a revised 1.1% in January, which was initially estimated as a 0.8% increase). Last year, Australia’s goods trade surplus narrowed to about A$45.1 bln from A$66.9 bln in 2024. Imports rose by an average of 0.5% a month in 2025 after averaging 0.8% increase in 2024. Exports rose by an average of 0.4% last year and fell by the same amount on average in 2024. Australia’s current account deficit widened to 2.6% of GDP in 2025 from a 2.2% shortfall in 2024.

Full story here Are you the author?

About Marc Chandler

He has been covering the global capital markets in one fashion or another for more than 30 years, working at economic consulting firms and global investment banks. After 14 years as the global head of currency strategy for Brown Brothers Harriman, Chandler joined Bannockburn Global Forex, as a managing partner and chief markets strategist as of October 1, 2018.

My articles My offer My site About me My books
Follow on:LinkedIN Twitter Seeking Alpha Amazon