The Japanese Yen (JPY) is strengthening against the US Dollar (USD) amid expectations of interest rate hikes by the Bank of Japan (BoJ). Increased JGB yields support the JPY, although US Dollar selling is not benefiting the USD/JPY pair, which is struggling to maintain levels near 151.00.

BoJ Governor Kazuo Ueda warned of the uncertainties in global economic policy, affecting JPY’s rises. Traders are cautious, waiting for upcoming US macro data, starting with the ISM Manufacturing PMI, which holds relevance for future market direction.

Japan Economic Growth And Inflation

Japan’s recent economic data shows growth and persistent inflation, supporting the case for further BoJ rate increases. The au Jibun Bank Manufacturing PMI reported a final reading of 49.0 for February, indicating the softest contraction in three months.

President Trump announced tariffs on Canada, Mexico, and increased tariffs on China, adding pressure on the USD. The Personal Consumption Expenditures Price Index declined slightly to 2.5% in January, while core PCE rose to 2.6%, influencing market speculation on Federal Reserve interest rate cuts in 2025.

Technically, the USD/JPY pair is facing resistance near 151.00 and has shown lower oscillators, suggesting a possible downward trend. A drop towards 150.00 is feasible, while strong momentum beyond 151.00 could signal a rally towards higher resistance levels.

Impact Of ISM Manufacturing PMI

The ISM Manufacturing PMI, a key economic indicator, will be released on 3 March 2025 with expected readings of 50.8, indicating potential economic expansion.

PMI readings above 50 denote growth, influencing market sentiment towards the USD. Stronger results could reflect positively on both the manufacturing sector and the dollar’s standing.

The yen has been gaining strength against the dollar as markets anticipate that the Bank of Japan will push ahead with interest rate increases. Higher Japanese government bond yields are reinforcing the currency’s position. Yet, despite weakened demand for the greenback, the dollar-yen pair is struggling to hold levels near 151.00.

Kazuo, leading the Bank of Japan, has pointed out the challenges that global economic policies bring. His remarks have introduced some turbulence into the yen’s rise. At present, traders are hesitating, watching closely for new economic data from the United States. The ISM Manufacturing PMI is the first major report on the schedule, and it is expected to shape market direction in the coming days.

Japan’s economy has continued to expand, and inflation has remained steady. Both factors make further rate hikes more likely. A recent survey tracking activity within Japan’s manufacturing sector posted a reading of 49.0 for February. While still representing a decline in activity, it was the mildest contraction in months.

Donald has made a fresh push on tariffs, imposing new trade measures on Canada and Mexico while increasing levies against Chinese goods. These decisions have added more weight on the dollar. Meanwhile, the latest PCE Price Index figures have shown mixed results. The main index softened to 2.5% in January, but the core measure, which strips out volatile food and energy prices, ticked up to 2.6%. This has nudged markets towards greater speculation regarding potential Federal Reserve rate cuts next year.

From a technical perspective, the dollar-yen pair is finding resistance around the 151.00 mark. Indicators hint at weaker momentum, creating conditions for a possible move lower. A drop towards 150.00 would not be out of place, although if buyers push through, an advance into higher levels could develop.

The focus now turns to upcoming US data, particularly the ISM Manufacturing PMI set for release on 3 March 2025. Forecasts suggest a reading of 50.8, which would signal expansion within the sector. When these figures climb above 50, they highlight growth, which in turn affects investors’ confidence in the dollar. If the report exceeds expectations, it could offer support for the currency and influence sentiment across the board.

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USD/CHF experiences slight losses, trading around 0.9020 in early European sessions, influenced by declining US Dollar strength and increased demand for the Swiss Franc as a safe-haven asset amidst global tensions.

The US Dollar Index drops to nearly 107.25 as traders anticipate potential rate cuts from the US Federal Reserve later this year. This situation is compounded by uncertainties surrounding the Russia-Ukraine conflict, which further enhances the appeal of the Swiss Franc.

The Role Of The Swiss Franc

The Swiss Franc, Switzerland’s official currency, is among the top ten most traded globally. Its value is shaped by economic conditions, market sentiment, and actions from the Swiss National Bank.

As a safe-haven currency, the Swiss Franc attracts investment during periods of market stress, thanks to Switzerland’s stable economy, robust export sector, and a history of political neutrality. The Swiss National Bank influences the Franc through its monetary policies aimed at controlling inflation.

Macroeconomic data from Switzerland is crucial in determining the Franc’s value. Economic growth metrics, inflation rates, and changes in central bank reserves impact the currency’s valuation directly, reflecting its stability amidst external pressures, particularly from the Eurozone.

The slight dip in USD/CHF around 0.9020 highlights a shift in market sentiment, where traders are pulling back on the US Dollar while increasing exposure to the Swiss Franc. The Dollar’s retreat, as seen in the Dollar Index falling to approximately 107.25, aligns with expectations that the Federal Reserve may begin cutting interest rates this year. This has made holding the currency less attractive. At the same time, broad geopolitical unease, particularly tied to Eastern Europe, has strengthened demand for safe-haven assets, with the Franc benefiting accordingly.

Impact Of Central Bank Policies

The Swiss Franc consistently holds its place as one of the most traded currencies worldwide. Its movements reflect a combination of domestic fundamentals, investor sentiment, and central bank strategies. Switzerland’s stable economic framework and neutral political position make it highly sought after, especially in times of uncertainty. Historical patterns suggest investors shift towards the currency when global risks rise, leading to bouts of upward pressure.

Setting aside general sentiment, traders must also monitor how the Swiss National Bank guides monetary policy to influence the Franc. Interest rate changes, interventions in foreign exchange markets, or shifts in inflation targets have all driven price action in the past. The central bank maintains a strong hand in ensuring the Franc does not appreciate too sharply, given Switzerland’s reliance on exports.

Economic releases from Switzerland remain central to understanding where the Franc may be headed next. Data such as retail sales, GDP growth, and inflation numbers reveal how resilient the domestic economy remains in response to external shocks. In the current setup, pressures from the Eurozone could add another source of volatility, particularly if economic data from key European partners starts to deteriorate.

For traders operating in derivatives markets, these factors cannot be ignored. Movements in this pair tend to be reactive rather than speculative, meaning short-term shifts often stem from broader macroeconomic events. As expectations on Federal Reserve policy shift and uncertainty in global markets persists, being aware of central bank commentary and economic figures will be necessary to anticipate the next directional move.

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On 3 March at 10am New York time, there is a notable FX option expiry for USD/CAD at the 1.4440 level. This expiry does not connect with any technical levels.

With ongoing developments regarding tariffs, particularly linked to Trump’s plans, market performance may reflect increased volatility as the day progresses. The present options may help stabilise price movements prior to US trading. Further guidance on utilising this data can be found in additional resources.

Impact On Intraday Price Action

While this expiry does not align with any clear technical markers, it still plays a role in intraday price action. Expiries of this size often attract attention, as trading desks assess whether hedging flows will contribute to short-term directionality. Given that these flows tend to emerge closer to the cut, the hour leading up to 10am in New York could see activity pick up, particularly if spot prices hover near the strike.

Beyond this, broader themes remain just as relevant. Discussions on tariffs continue to shape positioning, with Donald’s intentions drawing market focus. If trade policy rhetoric escalates, this could trigger greater movement in USD/CAD beyond what would typically be expected on an expiry-driven session.

Price stabilisation ahead of key US hours is something we may see, with options flows dampening swings before more directional forces take over post-expiry. While this carries weight in the morning session, the afternoon could bring a different rhythm, especially if fresh macro catalysts emerge.

As for how to navigate this, awareness of expiry-related positioning serves as a tool rather than a complete strategy. If spot moves within range of 1.4440, certain hedging flows could reinforce short-term levels, but once the expiry rolls off, pricing dynamics may shift. Whether the expiry holds influence or fades into a broader trend depends largely on prevailing sentiment and liquidity at the time.

Liquidity Conditions And External Catalysts

One factor influencing liquidity conditions is how traders react to the latest tariff discussions. If headlines shift expectations, any previous stability introduced by options flows could dissipate, giving way to larger movements. This makes it valuable to track both spot levels and sentiment throughout the session rather than assuming that the morning’s structure will persist into the later hours.

Aside from this, market participants should also remain adaptable to external catalysts. Economic data releases and shifts in risk sentiment can override expiry effects when the conditions align. With this in mind, having an understanding of the potential for price containment in the short run while also assessing broader shifts remains key.

This expiry provides a reference point, but the greater question remains whether it holds sway beyond the morning action. If external forces pick up, the afternoon could bring a different pace, meaning that flexibility remains at the forefront of how traders approach this session.

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This week features various manufacturing and services Purchasing Managers’ Indices (PMIs) from Europe, Canada, and the U.S., along with U.S. and Canadian labour market statistics.

The week starts with manufacturing PMIs from multiple regions, centring on the U.S. ISM manufacturing PMI and prices. Australia’s monetary policy meeting minutes and retail sales data will be released on Tuesday, while Wednesday focuses on Australia’s GDP data and Switzerland’s inflation figures.

Thursday includes the ECB’s monetary policy announcement and U.S. unemployment claims data. Key labour market data from the U.S. and Canada will be released on Friday.

Us Manufacturing Outlook

For the U.S., the ISM manufacturing PMI consensus is 50.6, slightly lower than 50.9, while ISM manufacturing prices are expected to rise to 56.2. Last month, the manufacturing PMI index exceeded 50, suggesting expansion, despite headwinds from weak global demand and higher interest rates.

The ISM services PMI consensus is set at 53.0, up from 52.8, indicating a resilient services sector amid economic uncertainty. Analysts note that consumer demand for services is strong, supported by a robust labour market, although inflationary pressures remain.

Switzerland’s CPI is expected to rise by 0.5% month-over-month, aligning with a 0.2% quarterly economic expansion in Q4 2024. With inflation easing, a 25 basis points rate cut from the Swiss National Bank is anticipated.

The ECB is also likely to announce a 25 basis points rate cut, as recent inflation figures and economic contractions in Germany and France prompt continued policy easing.

In Canada, employment change is predicted to be 17.8K with a slight unemployment rate rise to 6.7%. Ongoing uncertainty regarding U.S. tariffs may hinder hiring momentum, despite recent labour market stabilisation.

In the U.S., average hourly earnings are expected to rise by 0.3%, while non-farm employment change may reach 156K. The unemployment rate is anticipated to remain at 4.0%, though slower labour demand is indicated by declines in small business hiring and job postings.

Wells Fargo predicts a potential uptick in the unemployment rate to 4.1% and a slight decline in federal government payrolls due to workforce reductions. Economic factors suggest that slower labour force growth may limit future wage declines.

The upcoming days bring a series of releases that will shape expectations across multiple sectors. Manufacturing and services PMIs across key global economies will provide fresh insights into business conditions, while employment reports from North America will set the tone for wage trends and hiring activity.

A weaker reading for the U.S. ISM manufacturing PMI suggests that growth across factories could be stalling, even as manufacturers navigate higher borrowing costs and weakened international demand. However, prices in this sector are continuing to climb, pointing to stubborn cost pressures that may affect future production decisions. Services, meanwhile, appear to be holding firm despite ongoing pressure from shifting consumer habits and tighter financial conditions.

Australia’s economic data will show how its economy performed in the last quarter, with its monetary policy minutes shedding light on rate-setters’ latest views. Inflation in Switzerland, expected to rise modestly, fits into a wider pattern of subsiding cost pressures, offering policymakers enough confidence to proceed with gradual rate cuts. The decision by the Swiss National Bank is likely to confirm what many have been anticipating: more policy easing ahead.

European Central Bank Policy Shift

In Europe, all eyes will be on Christine and her colleagues as they reveal their latest monetary policy adjustments. With inflationary pressures appearing to moderate and Germany and France struggling with weaker output, the expected rate cut from the ECB is in line with previous signals. The central bank remains focused on balancing its response to economic weakness while ensuring it does not move too aggressively.

Canada’s employment report is likely to reflect a mix of stabilisation and underlying concerns. While hiring numbers show continued resilience, the rise in unemployment could highlight hesitancy among businesses facing uncertainty around trade policy. Another month of moderate wage growth could reinforce expectations that the employment situation is cooling gradually rather than faltering outright.

On the other side of the border, wage growth in the U.S. remains in focus, with a modest rise in hourly earnings anticipated. Hiring figures, while positive, are expected to soften, reflecting a more cautious stance among employers. Although the country’s unemployment rate has held steady at 4.0%, Wells Fargo’s forecast of a slight uptick suggests that wider economic shifts are beginning to influence job markets. Additionally, planned reductions in federal payrolls could further shape the overall employment picture.

These labour market shifts, paired with the inflation outlook and monetary policy developments, will play a key role in shaping expectations among those closely watching how central banks respond. While the data provides clarity in some areas, it also leaves open questions about the path ahead for interest rates and employment conditions.

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Gold prices in the Philippines experienced an increase on Monday. The price per gram reached 5,340.18 Philippine Pesos (PHP), up from 5,315.87 PHP last Friday.

Gold also rose to PHP 62,286.75 per tola, compared to PHP 62,003.31 per tola on Friday. Current prices are as follows: 1 gram at 5,340.18 PHP, 10 grams at 53,401.75 PHP, 1 tola at 62,286.75 PHP, and 1 troy ounce at 166,098.10 PHP.

Factors Influencing Gold Prices

Gold prices can fluctuate due to various factors, including geopolitical issues and interest rates. Additionally, the performance of the US Dollar significantly impacts gold pricing.

This rise in gold prices in the Philippines follows recent movements in the broader market. When looking at these numbers, it’s clear that gold keeps proving its status as a preferred store of value, especially during uncertain periods. The increase from last Friday to Monday may not seem dramatic, but it shows the market’s sensitivity to wider financial conditions.

Interest rates and geopolitical concerns are two key elements that traders must always watch closely. When rates climb, holding gold becomes less attractive since it does not yield interest like bonds or savings accounts. On the other hand, when economic uncertainty grows, demand for gold often increases as investors seek stability. These forces do not act in isolation but rather push and pull on prices daily.

The US dollar also plays a massive part in determining gold’s value. A strong dollar tends to restrict gold price movements since it makes the metal more expensive for buyers using other currencies. When the dollar weakens, gold typically gains momentum. This relationship is especially relevant for those dealing in derivatives, as any shift in the currency’s value can create opportunities for quick moves.

Market Volatility And Trader Strategies

Volatility should be expected in the coming weeks, and traders must react with agility. Watching central bank statements and interest rate decisions could offer useful insights. By keeping a close eye on these external factors, traders can better assess when to act.

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Demand for Pound Sterling (GBP) weakened against the US Dollar (USD), resulting in a correction from the ten-week peak of 1.2716. The GBP/USD pair ended its three-week rising trend, affected by strong haven demand for the USD.

Despite expectations of divergent interest rate cuts between the Bank of England (BoE) and the US Federal Reserve (Fed), the BoE is expected to adopt a more cautious approach due to UK inflation and economic concerns. On Monday, GBP/USD rebounded above 1.2600, supported by modest USD weakness.

Us Dollar Index Performance

The USD Index (DXY) started the week on a weaker note, reversing much of its recent gains. Market sentiments are currently dampened regarding the US economy, which may influence further policy adjustments by the Fed.

The British currency lost ground against the US Dollar, with the price pulling back from its highest level in ten weeks. For three weeks, the exchange rate had been climbing, but that trend broke as demand for the American currency surged. Investors sought safety, propping up the US Dollar, which weighed down the Pound.

There’s a broad expectation that central banks on both sides of the Atlantic will take different approaches to adjusting interest rates later in the year. The Bank of England is not in any rush to make deep cuts. Inflation remains a persistent concern, and the UK economy has shown enough weakness to keep decision-makers cautious. That means policymakers could move slowly, keeping rates higher for longer to avoid fuelling further price increases.

However, as trading resumed this week, the Pound regained some footing. The exchange rate moved back above 1.2600, helped by a slight downturn in the US Dollar’s strength. Traders pulling back from the Dollar gave the Pound a brief boost, though it’s uncertain whether that trend will hold.

Impact On Currency Traders

Looking at the broader picture, the US Dollar has been under pressure, with its overall value slipping at the start of the week. Many investors have reassessed their view of the American economy, leading to doubts about how much room the Fed has for keeping interest rates restrictive. If concerns about economic growth escalate further, markets may price in a greater likelihood of the Fed making adjustments sooner rather than later.

For those trading derivatives linked to these currency movements, it is worth monitoring whether the Dollar’s recent pullback continues or whether demand resurges. If sentiment shifts further against the US economy, that could translate to weakness in the Dollar, offering more room for the Pound to recover ground. However, any renewed risk aversion among investors would likely work in favour of the Greenback, meaning sudden reversals should not be ruled out.

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Federal Reserve Bank of St. Louis President Alberto Musalem will address the U.S. economy and monetary policy on 3rd March 2025 at the National Association for Business Economics conference.

He has previously stated that inflation is anticipated to return to 2% before any alterations in policy occur, and that productivity is increasing towards its trend.

Musalem also noted that while he expects inflation to decrease, there are risks that could drive it higher.

Inflation And Monetary Policy

Alberto will soon speak about the current state of the economy and the direction of monetary policy. Given his past comments, it is evident that price stability remains the primary concern. His insistence that inflation must approach 2% before considering any policy adjustments reinforces the idea that interest rates will not be lowered prematurely.

We have already observed inflation trending downward, which aligns with his expectations. However, his remarks about potential risks cannot be overlooked. He has pointed out factors that could push prices upward instead of continuing their current path. If those risks materialise, it could delay any easing of financial conditions.

Productivity is also something Alberto has brought up. He believes it is moving back towards its historical behaviour, which may support economic growth without adding to inflationary pressures. If this trend holds, a stronger output without excessive price increases may allow for a smoother policy transition when the time comes.

Market Expectations And Economic Data

His speech on 3rd March will give more clarity on whether his views have changed. If he remains firm on his prior stance, expectations around interest rates and inflation targets will stay anchored. However, if his tone shifts, it could indicate that recent data has forced a reassessment.

With this in mind, the coming weeks will require a careful watch over economic reports and any indications that previous assumptions need adjusting. If his concerns about upward price pressures gain traction, it would not be surprising to see a more cautious approach. Conversely, if inflation continues its downward march without new risks emerging, the timing of monetary adjustments may need re-evaluating.

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Dear Client,

Please note that the dividends of the following products will be adjusted accordingly. Index dividends will be executed separately through a balance statement directly to your trading account, and the comment will be in the following format “Div & Product Name & Net Volume ”.

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Gold’s rise in value at the start of the week reflects a broader trend that has played out across the global market. With a single gram reaching 338.62 AED, up from Friday’s 337.09 AED, and a tola increasing to 3,949.74 AED, there is a clear upward momentum. These movements align with what we have observed in international trading, where prices closely follow shifts in demand, monetary policy, and investor sentiment.

To keep these figures in perspective, one troy ounce is now priced at 10,532.20 AED. Since these rates are updated daily and depend on international benchmarks, they continue to shift based on market forces. Traders who are reacting to these fluctuations should be aware that short-term changes in pricing often reflect broader economic themes rather than isolated market events.

Geopolitical And Economic Influences

When we take into account that central banks collectively acquired 1,136 tonnes of gold in 2022 alone—worth approximately $70 billion—it is evident that institutional demand remains prominent. Central banks continue to see value in gold as a tool for diversification, reinforcing their reserves while maintaining the perception of currency stability. Historically, their purchasing activity has served as an indicator of confidence in fiat currencies and the broader economy.

External forces also play a crucial part in price movement. Interest rates, for example, shape the opportunity cost of holding gold. Because it does not yield interest, gold typically becomes more attractive in lower-rate environments when compared to income-generating assets. If interest rates remain high, gold may face headwinds. However, if rate cuts become more likely, gold’s appeal may improve further.

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Beijing’s decision to focus on agricultural goods places pressure on one of the most politically sensitive sectors in Washington. Farmers across the United States, particularly those in rural regions, have felt the strain from previous trade measures, and any further restrictions could deepen those difficulties. Given the weight that agricultural states carry in American elections, the move appears to target a base that has historically been vocal in trade disputes.

Chinese Economic Priorities

While policymakers in Beijing have remained measured in their official statements, reports suggest that duties on soybeans and pork are once again being considered. These products have been central to previous disputes, and even the hint of new levies has already unsettled exporters. Market participants will need to reassess expectations in light of these developments, as routes that were once reliable for trade could narrow further.

The broader economic context also plays a direct role. Consumption within China has yet to fully recover from the prolonged effects of prior restrictions, and authorities are balancing domestic priorities with external pressures. We see that economic planners are discussing stimulus efforts that prioritise self-sufficiency, which suggests a longer-term decoupling in specific industries. For those monitoring trade flows, this reinforces expectations that dependency on American agricultural supplies may continue to decline.

Market Volatility

In Washington, trade representatives have acknowledged the possibility of retaliation but have not laid out a formal timeline for any response beyond the tariffs that were already announced. While official rhetoric remains firm, industries dependent on exports are already lobbying for adjustments. Commodity markets will reflect these tensions well before policymakers act, leaving traders to navigate shifting expectations without fixed guidance.

Foreign exchange markets have also responded, with fluctuations in the yuan reflecting both investor caution and policy speculation. While moves have been within expected ranges, sentiment has weakened compared to earlier in the quarter. Currency stability remains a stated priority for Beijing, but targeted interventions may be required if outflows accelerate.

The weeks ahead will likely determine the direction of trade relations beyond this immediate dispute. If no new negotiations emerge, prolonged uncertainty will give traders little choice but to hedge against ongoing volatility.

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