The Australian Dollar (AUD) has faced decline for six consecutive days, pressured by US tariffs on Chinese imports, which are now set at 20%. The US GDP grew by 2.3% in Q4 2024, matching market expectations, while AUD/USD trades around 0.6220, with support at 0.6200.

A fall below 0.6200 may see the pair drop to 0.6087, its lowest since April 2020. Following the GDP announcement, the US Dollar Index rose above 107.00, as market sentiment reacted to the tariff threats impacting Australia-China trade dynamics.

Australia’s Private Capital Expenditure data fell by 0.2% in Q4 2024, signifying an unexpected contraction. The Reserve Bank of Australia’s Deputy Governor indicated concerns about inflation and a tightened labour market, coinciding with a recent reduction of the Official Cash Rate to 4.10% after four years.

Ongoing trade war risks remain prominent, especially with data releases and interactions between the US and China. The health of China’s economy and the price of iron ore play vital roles in influencing the AUD, given their direct connection to Australia’s exports.

Interest rates set by the RBA significantly influence the AUD’s relative strength, affecting overall economic conditions. A robust trade balance may support the currency, while a negative balance could lead to a depreciation. In summary, the AUD is adversely affected by geopolitical tensions and its economic context in global markets.

Philip Lowe’s comments on inflation and the state of the labour market highlight an economy at a turning point. With the Reserve Bank of Australia having recently lowered the cash rate to 4.10%—the first cut in four years—the policy shift suggests the central bank is trying to mitigate domestic challenges. Meanwhile, the Australian Dollar’s ongoing struggles against the US Dollar underscore external pressures, particularly the deepening trade tensions between the world’s two largest economies.

From a trading standpoint, the 0.6200 level serves as an important threshold. Should the pair fall through this point, further losses may see it testing 0.6087, a level last reached during the market stress of early 2020. Given the recent contraction in private capital expenditure, a decline in business investment could add further weight to an already pressured currency. Those involved in the market must acknowledge that downward momentum may persist if economic data continues to disappoint.

The rise in the US Dollar Index above 107.00 following the GDP report indicates that traders are maintaining confidence in the US economy, which, for now, remains resilient. That resilience, combined with a more restrictive trade position from Washington, raises concerns over Australia’s economic exposure to Chinese demand. China’s economy has long played a substantial role in shaping the strength of the Australian Dollar, particularly through its influence on commodity exports.

We cannot overlook the importance of iron ore prices as they remain a leading factor in the currency’s performance. Fluctuations in China’s industrial output tend to dictate movement in demand for Australian raw materials. If China were to slow materially, it would ripple through Australia’s export revenues, exerting further downward pressure on the currency.

In the weeks ahead, updates on trade negotiations between the US and China should be carefully observed, as any escalation could lead to further losses for the Australian Dollar. A broader shift in risk sentiment, particularly one driven by concerns over global economic growth, may also play a role in influencing price action. While a stabilisation above 0.6200 would provide temporary relief, broader macroeconomic forces are likely to dictate whether the currency finds stability or continues facing depreciation.

OpenAI CEO Sam Altman announced plans to add tens of thousands of GPUs next week with the release of GPT-4.5. This model is described as the largest and most powerful to date.

The rollout will commence with the plus tier of the service. Altman stated that the model will be both “giant” and “expensive,” indicating OpenAI’s significant growth and current GPU limitations.

Altman’s statement reaffirms what many have already observed—OpenAI’s rapid expansion continues, but the sheer cost and technical burden cannot be ignored. A model of this size requires an enormous number of GPUs, something that has become a recurring concern for large-scale AI deployments. The mention of “giant” hints at both the model’s complexity and, more importantly, the increased resource demand that will come with it.

This comes at a time when demand for high-end chips is nowhere near slowing down. Nvidia remains the dominant supplier, and the industry has already been dealing with shortages that have, at times, constrained AI companies. The upcoming expansion suggests that OpenAI is securing hardware at a faster pace, which could be read as confirmation that supply issues are easing—at least for them. Whether this extends to others in the space is another matter entirely.

Then there is the question of operating costs. “Expensive” is not just a throwaway comment; these systems bring enormous electricity consumption and ongoing expenditure. If OpenAI is willing to publicly acknowledge these costs, it underlines the continued financial weight these models carry. Cloud providers supplying computing power to AI firms have been adjusting their pricing accordingly, which means these costs are unlikely to stabilise in the near term.

For those tracking where high-compute AI is headed, these developments bring both opportunities and fresh challenges. Pricing strategies may shift in response to the increased needs of OpenAI, and any supply chain disruptions would send ripple effects elsewhere. The launch taking place through the plus-tier subscription first is also revealing—OpenAI is prioritising those users, possibly as a way to better control demand or gather early insights before wider availability.

Even beyond OpenAI, the pressure to keep pace with these advancements will weigh on competitors. Scaling up infrastructure is not an overnight process, and any delay in acquiring more GPUs could mean a widening gap between market leaders and those trying to catch up. Some firms may respond by refining their own models to operate with fewer resources, but how that plays out will depend on whether they can maintain quality while doing so.

This is the environment that will shape decisions in the coming weeks. Every adjustment in compute availability, subscription access, and cost structure feeds into broader movements, all of which need to be watched carefully.

WTI crude oil is trading around $69.90 per barrel, marking its first potential monthly decline since November, primarily due to concerns over global economic growth and fuel demand. The US will implement a 10% tariff on Canadian energy imports starting March 4, affecting market dynamics.

On Thursday, oil prices increased over 2% after the US revoked a Chevron license for operations in Venezuela, which may disrupt the country’s oil output significantly. The OPEC+ group is assessing whether to maintain or increase oil production levels amid uncertainty from US sanctions on Venezuela, Iran, and Russia.

US economic data indicates a slowdown, with GDP growth decreasing to 2.3% in Q4 and jobless claims rising to 242,000, signalling potential labour market easing. The market is awaiting the PCE price index report, important for inflation assessment.

At present, crude oil is sitting close to $69.90 per barrel, marking a possible end to its monthly streak of gains that began in November. A primary factor behind this shift is mounting concern over the strength of global economic growth and what that might mean for fuel consumption. Adding to market uncertainty is Washington’s plan to introduce a 10% tariff on Canadian energy imports starting in early March, which could create additional strain on cross-border energy trade.

Thursday saw oil prices jump by more than 2% after Washington pulled Chevron’s Venezuelan license, a decision that may have lasting effects on the country’s crude output. Given Venezuela’s struggling production levels, any further setbacks could impact global supply calculations. Meanwhile, OPEC+ is still weighing its next move—whether to maintain existing production quotas or adjust them—as it considers the impact of US sanctions on Venezuela, Iran, and Russia. The uncertainty around those three nations places added pressure on the group’s decision-making, something traders will need to keep a close watch on.

Turning to the US economy, fresh data reveals some softening. Economic growth slowed to 2.3% in the final quarter of last year, and jobless claims ticked up to 242,000, a figure that could indicate early signs of a cooling labour market. This raises questions about future demand for crude, particularly if broader concerns over economic momentum continue. Attention now shifts to the PCE price index report, widely used to gauge inflation pressures. Its implications will go beyond monetary policy expectations and could influence how markets position themselves in the short term.

The Japanese Yen (JPY) gained traction during the Asian session on Friday, spurred by hawkish comments from Bank of Japan Deputy Governor Shinichi Uchida, who noted a gradual rise in the inflation rate towards the 2% target. The remarks bolstered expectations of further interest rate hikes by the Bank of Japan, countering the softer-than-expected Tokyo Consumer Price Index (CPI) data.

Tokyo’s headline CPI decreased from 3.4% to 2.9% year-on-year in February, while core CPI dropped from 2.5% to 2.2%. Additionally, Japan’s Industrial Production declined by 1.1% month-on-month in January, marking three consecutive months of decreased output.

In the United States, inflationary pressures remain present, reinforcing the Federal Reserve’s cautious approach to monetary policy. The GDP expanded at a 2.3% annualised rate in the final quarter of 2024, aligning with earlier estimates.

The USD/JPY pair retreated below the mid-149.00s, with key support seen at the 149.00 mark. Resistance levels are identified at 148.80 and 150.00, suggesting potential further fluctuations in this range.

Shinichi’s remarks gave traders more confidence that the Bank of Japan could move forward with tighter monetary policy, even though inflation data from Tokyo alone painted a softer picture. While consumer prices there came in below expectations, what matters more is that policymakers, such as him, see the national trend as still pushing towards their long-term aim of stable inflation at 2%.

We also cannot overlook the weakness in Japan’s industrial sector. A third straight month of output declines hints at broader concerns about domestic demand and manufacturing strength. However, the Bank of Japan appears more focused on inflation expectations rather than singular economic reports. That means those trading yen pairs should prepare for future statements from central bank officials. If additional policymakers adopt a similar stance to Shinichi, the market may start pricing in rate changes more aggressively.

Meanwhile, across the Pacific, inflationary forces remain a key concern for Federal Reserve officials, which has kept investors focused on how soon policymakers might consider adjusting interest rates. The most recent US GDP report showed steady growth at 2.3%, confirming that the economy has remained on a solid footing. While this does not dramatically shift expectations for Fed policy, it reinforces the idea that the central bank has reason to avoid easing too quickly.

With the dollar-yen pair easing back below the mid-149 range, immediate attention shifts to levels at 149.00, which may serve as a temporary floor. Should price action remain within this band, any downward pressure could test support near 148.80. On the upside, resistance remains firm around 150.00, making it an area to watch for potential breakouts. Traders managing positions in this market should be mindful of both central bank rhetoric and further economic data that might influence broader sentiment.

Federal Reserve Bank of Philadelphia President Patrick Harker has suggested that a rate hike is not entirely ruled out. While he mentioned that the Fed Funds rate is likely to stay on hold, he stated that potential movements could occur in either direction.

He indicated that there may be a greater chance of a rate cut in the future, but there are no immediate plans for an increase. Harker described the current policy as mildly restrictive and observed that the labour market is aligning with previous trends, noting that shelter inflation should decline at some point.

Patrick’s comments highlight that there is still some uncertainty surrounding future policy moves. While he leans towards keeping rates steady for now, he has not completely dismissed the possibility of another hike. That alone suggests that those expecting an immediate shift to lower rates may need to adjust their expectations.

The fact that he sees policy as only mildly restrictive is also worth noting. If conditions do not tighten enough to slow inflation further, there may be less urgency to cut. At the same time, he appears to believe that broader trends—particularly in jobs and housing costs—are moving in a direction that could support lower rates later on. His view that shelter inflation should decline implies that one of the more persistent contributors to overall price growth may ease, removing a barrier to policy adjustments.

Given this backdrop, positioning based on an assumption that cuts will arrive quickly carries risks. There are indications that rates could stay where they are for some time. The possibility of an increase, even if not the most likely scenario, must at least be factored into decision-making. Any trades that assume a near-term shift in policy could be exposed if incoming data does not justify one.

Inflation readings in the coming weeks will play a role in shaping expectations. If price pressures remain stable or ease further, mentions of potential cuts may grow louder. However, any stubborn inflation prints could reinforce the argument that patience is required before any adjustments take place. Labour market trends will also matter. Patrick’s suggestion that employment conditions are aligning with past norms suggests that policymakers see fewer risks of overheating. But any sudden changes in job growth or wages could alter that view.

There is also the question of how markets respond to this messaging. If investors continue to expect cuts sooner rather than later despite warnings that policy could remain tight, it could lead to volatility when reality does not match those assumptions. That would be particularly relevant if stronger-than-expected economic data forces a repricing of expectations.

In short, while rate cuts may still be likely down the line, there is no definitive timeframe. The risks of holding firm for longer—or even tightening again—are not entirely off the table. That means any moves based purely on the idea that lower rates are just around the corner come with dangers that should not be ignored.

The Indian Rupee (INR) experiences mild losses due to increased demand for the US Dollar (USD) and ongoing foreign fund outflows. The market sentiment is dampened ahead of India’s GDP release, with the currency under pressure from external factors like US tariff announcements.

India’s GDP for the fourth quarter is projected to grow by 6.2%, while the US GDP increased by 2.3% in the same period. The Reserve Bank of India (RBI) is expected to intervene in the foreign exchange market to stabilise the Rupee, particularly if the USD continues to strengthen.

The USD/INR pair remains above the 100-day Exponential Moving Average, indicating a bullish outlook. Resistance is at 87.40, with potential upward movement towards 88.00, while support is found at 86.48, potentially dropping to lower levels if trends reverse.

Inflation and interest rates also play a vital role in influencing the Indian Rupee’s value, affecting both domestic and international perceptions. Foreign investment levels and trade balances further impact the currency, with macroeconomic conditions leading to fluctuations in demand for the Rupee.

With the Indian Rupee showing mild declines, it’s clear that external pressures are weighing on its performance. The strength of the US Dollar, combined with persistent foreign fund outflows, has made currency markets cautious. Adding to this, the anticipation surrounding India’s upcoming GDP release has fuelled uncertainty.

Forecasts place India’s fourth-quarter GDP growth at 6.2%, while the US economy saw a 2.3% increase in the same period. Given this, it wouldn’t be surprising if the Reserve Bank of India steps in to provide stability, especially if the USD continues its upward trajectory. Intervention in the foreign exchange market is a strategy that we’ve seen before when the Rupee shows signs of depreciation beyond acceptable levels.

From a technical perspective, USD/INR remains above the 100-day Exponential Moving Average, pointing towards an overall bullish structure. Resistance sits at 87.40, with a possible climb towards 88.00 if momentum persists. On the downside, support is currently observed at 86.48, and should sentiment change, a further drop could be on the cards.

Beyond technical levels, rising inflation and monetary policy decisions are shaping the Rupee’s movement. Interest rates in particular influence how both domestic and global investors view the currency. Additionally, foreign direct investment and trade balances continue to play their part in dictating demand. Recent macroeconomic conditions have amplified volatility, making it even more important to assess market direction with caution in the weeks ahead.

For traders navigating the derivatives market, watching global sentiment regarding US tariff policies and India’s fiscal outlook will be key. These factors could easily tip the balance one way or the other. While intervention from the central bank remains likely, broader market trends may hold more weight in determining the overall trajectory.

Major stock indices closed lower today, with the NASDAQ suffering its worst trading day since January 27, down 3.97% year-to-date.

The Dow industrial average closed at 43,239.50, down 193.62 points or 0.45%. The S&P index fell 94.49 points or 1.59% to finish at 5,861.57, while the NASDAQ closed at 18,544.42, down 530.84 points or 2.78%. The Russell 2000 also declined by 34.5 points or 1.59%, ending at 2,139.65.

Nvidia shares dropped by 8.48% following its earnings announcement. Other notable declines included Palantir at 5.10%, Meta at 2.29%, Microsoft at 1.80%, and Amazon at 2.62%.

Tesla fell by 3.04% to $281.95, nearing its 200-day moving average of $278.14, which it last tested on August 28. The current stock price is down 42% from its December high of $488.54.

These declines come after a period of strong gains across the broader market. With the NASDAQ now down nearly 4% for the year, the recent downturn suggests a shift in sentiment. Large-cap technology stocks, which have been the driving force behind recent rallies, saw broad-based weakness, with Nvidia at the forefront. The 8.48% drop in its share price followed an earnings report that, while strong on paper, may have failed to meet the market’s lofty expectations.

When a company of this size falls this much in a single session, it tends to have ripple effects. We saw that in the broader tech sector, with declines in Microsoft, Meta, and Amazon. This wasn’t limited to high-growth firms either, as Palantir’s fall suggests investor risk appetite may be decreasing. Even Tesla, which had already been struggling, edged closer to an important technical level. If it breaks below its 200-day moving average, historical patterns suggest further downside could be possible.

The broader index declines show this isn’t just a tech-sector story. The Dow, typically more insulated from volatility in high-growth names, still lost nearly 200 points. The Russell 2000, which tracks smaller companies, fell in line with the S&P 500. This means selling pressure was widespread. Market participants should ask whether this marks the start of a longer downturn or just a short-term pullback.

Economic data and central bank policy will be closely watched. The Federal Reserve’s next decision looms large, and with inflation still a concern, there is little room for dovish surprises. If rate expectations stay elevated, high-valuation stocks could face further pressure. Earnings season is still in full swing, meaning more volatility is likely. For those watching technicals, the NASDAQ’s next support level isn’t far below today’s close. How it behaves in the coming sessions will be telling.

North Korea has conducted a test of a strategic cruise missile aimed at assessing its nuclear deterrence capabilities. In the past, such events would have triggered a market shift towards the yen and the US dollar.

Currently, the US dollar is experiencing gains due to ongoing discussions regarding tariffs. This trend indicates a more complex response in the financial markets to geopolitical developments than in previous years.

The latest missile test from Pyongyang reinforces its ongoing strategy to project strength. Historically, such actions would prompt a noticeable shift towards safe-haven currencies, particularly the yen and the dollar. However, this time, we are not seeing the same reaction. Instead, the dollar’s position appears to be driven by ongoing trade policy discussions, which have taken priority in shaping investor sentiment.

Washington’s tariff policies are now influencing currency movements more than geopolitical risks from East Asia. Traders accustomed to rapid capital flows into safer assets during periods of geopolitical tension may need to reconsider their expectations. With financial markets placing greater weight on trade and monetary policy, immediate turbulence from missile tests may not be as pronounced as before. That does not mean such events should be ignored, but their ability to shift capital flows appears to have diminished.

Meanwhile, Tokyo’s currency is not showing the strength it often would in similar situations. Market participants might view rates policy as a more pressing factor. While some would normally rush to the yen when uncertainty rises, hesitation can be seen. Recent commentary from policymakers suggests a cautious approach, and this has likely made some reluctant to position too strongly in either direction.

Looking ahead, data releases and official statements from Washington will remain pivotal for the dollar’s trajectory. The broader conversation around tariffs continues, and as long as that remains in focus, fluctuations in the dollar may be more tied to economic policy than external military developments. For those watching closely, this reinforces the need to track not just immediate headlines but also policy signals that could dictate market direction.

The Australian Dollar (AUD) has experienced a sixth consecutive day of decline, pressured by US tariffs proposed by President Trump on Mexican, Canadian, and Chinese goods. These tariff announcements have led to concerns about the AUD’s performance given China’s significant trade relationship with Australia.

Recent Australian Private Capital Expenditure data showed a contraction of 0.2% in Q4 2024, falling short of the expected 0.8% growth. This follows a previous quarter’s growth of 1.6%.

The US Dollar Index (DXY) rose above 107.00, aided by a 2.3% expansion in US GDP for Q4 2024, meeting market expectations. Further comments from officials indicated a preference for maintaining current interest rates amidst inflation pressures.

The People’s Bank of China injected CNY300 billion into the economy, alongside additional liquidity measures to support state-owned banks. The Commonwealth Bank of Australia noted that escalating trade tensions could adversely affect the AUD.

The Reserve Bank of Australia recently lowered its Official Cash Rate to 4.10%, marking its first cut in four years, while cautioning that it is premature to declare an end to inflation concerns.

Currently, the AUD/USD is around 0.6220, testing support at the 0.6200 level. A breach could see it drop to 0.6087, whereas resistance levels are noted at 0.6297 and 0.6302. The overall market sentiment remains bearish for the currency pair.

The continued slide in the Australian Dollar suggests that traders are adjusting their positions in light of external economic headwinds. With tariffs from the US directly impacting China, Australia’s largest trading partner, the effects are naturally cascading down to the currency. The pressure on AUD is compounded by recent data showing private capital expenditure slipping into negative territory, missing expectations by a broad margin. This underscores hesitation among businesses regarding investment, likely due to uncertainty in both domestic and global conditions.

Meanwhile, in the US, a robust GDP reading of 2.3% for the last quarter of 2024 has reinforced confidence in the Dollar. This figure, aligning precisely with expectations, has provided further justification for policymakers to hold interest rates steady. Officials continue to prioritise inflation management, and with growth holding firm, there’s no immediate reason for them to shift their stance.

Over in China, policymakers have taken additional steps to stabilise economic conditions through further liquidity injections, amounting to CNY300 billion. Extra support for state-owned banks signals that authorities want to prevent any financial strains from worsening. However, considering the current backdrop of trade difficulties, these measures may not be enough to provide a lasting boost to the Australian Dollar. Commonwealth Bank analysts highlighted the likelihood of continued downside risk as trade restrictions persist.

Domestically, an interest rate cut by the Reserve Bank of Australia has introduced further challenges for the currency. Taking the Official Cash Rate down to 4.10% was a response to easing inflationary pressures, but central bankers were careful to stress that inflation remains a concern. This suggests that while further cuts may be on the table, they are by no means guaranteed. Given that higher rates tend to support a currency by offering better returns, the recent adjustment has instead had the opposite effect, contributing to weakness in the exchange rate.

As for the technical setup, the Australian Dollar has been hovering around 0.6220 against the US Dollar, with traders watching to see if it will hold above 0.6200. A drop below that level could bring 0.6087 into play, deepening the bearish trend. On the upside, resistance sits between 0.6297 and 0.6302, which would require a shift in sentiment and some relief in external risks to be tested. For now, the prevailing mood in the market remains cautious, with sellers still in control.

On 27 February 2025, President Trump announced a new 10% tariff on China, adding to the existing 10%, totalling 20%. The White House confirmed that tariffs on Canada and Mexico remain in place, impacting market sentiments.

US initial jobless claims were reported at 242,000 compared to an estimate of 221,000. Meanwhile, January durable goods orders rose by 3.1%, surpassing the expected 2%, and Q4 GDP growth was steady at 2.3%.

Market reactions were negative, with the S&P 500 down 1.6% and Nasdaq falling 2.8%. The Australian dollar weakened significantly, while gold decreased by $44 to $2,872.

The fresh tariff announcement compounds existing trade pressures, raising the total levy on Chinese goods to 20%. This move reinforces concerns about higher costs for businesses relying on imports while increasing the likelihood of retaliatory measures from Beijing. The White House’s confirmation that tariffs on Canada and Mexico remain unchanged has also contributed to ongoing uncertainty, as companies continue to navigate these trade conditions.

Unemployment claims were notably higher than expected, coming in at 242,000 instead of the projected 221,000. This suggests that businesses may be adjusting their workforce plans in response to economic pressures. However, the 3.1% increase in durable goods orders—easily outpacing the forecasted 2% rise—shows that demand for long-term investments remains intact. Alongside that, the economy expanded at a steady 2.3% in the final quarter of 2024, aligning with expectations and indicating no sudden shift in underlying growth momentum.

Markets responded with a clear downward move, shaking investor confidence. The S&P 500 saw a 1.6% loss, while the Nasdaq dropped by 2.8%, with technology stocks under more pressure than broad-market equities. Meanwhile, the Australian dollar fell sharply, likely reflecting a combination of trade uncertainties and shifting risk sentiment. Gold, often seen as a safe-haven asset, slipped by $44 to $2,872, suggesting that investors were unwinding some defensive positions or reallocating capital elsewhere.

In the coming weeks, attention will be on potential policy responses and whether Beijing introduces countermeasures that could add further volatility. At the same time, economic data releases will help provide more clarity on whether the weak jobs figure is a one-off or the beginning of a broader trend. Market participants should watch how these factors influence price movements across key sectors.