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.

The People’s Bank of China (PBOC) established the USD/CNY central rate at 7.1738 for the upcoming trading session, slightly lower than the prior rate of 7.1740 and much lower than the 7.2873 forecasted by Reuters.

The PBOC’s primary tasks include maintaining price and exchange rate stability while fostering economic growth. As a state-owned entity, its management is influenced by the Chinese Communist Party, with Pan Gongsheng currently holding key leadership roles.

The PBOC employs various monetary policy tools, such as the seven-day Reverse Repo Rate and the Medium-term Lending Facility, to achieve its economic goals. China has 19 private banks, with WeBank and MYbank being the largest.

Setting the USD/CNY central rate at 7.1738, just a fraction beneath its previous level but far weaker than what was widely predicted, shows that the central bank continues to exert tight control over the currency’s value. By keeping it well below expectations, the authorities appear keen to prevent excessive depreciation while sending a clear message to market participants. This move, though not abrupt, reflects a consistent pattern in daily fixings where official guidance diverges from market estimates.

The Chinese central bank, being tasked with economic stability, has its hands full managing inflation and the yuan. It does not function as an independent entity in the way its Western counterparts often do, with its policy-making undeniably influenced by political leadership. Pan, who currently oversees both the monetary and regulatory fronts, plays an essential role at a time when global currency moves are becoming more sensitive to central bank actions.

Market participants paying attention to these daily reference rates will have noticed that the gap between predictions and the actual fix has persisted, showing that authorities remain determined to guide expectations. We have observed time and again how Beijing signals its intentions through this mechanism, and those trading derivatives based on the yuan should take heed of this measured approach. It often precedes further liquidity adjustments through tools such as the reverse repo and medium-term lending facilities.

WeBank and MYbank, as the largest privately controlled lenders in China, stand as useful indicators of how financial institutions operate in an environment where policy decisions shape broader lending conditions. While the number of purely private banks remains low, their role in the financial system cannot be ignored, particularly given the close ties between banking activity and monetary direction.

At a time when foreign exchange markets are particularly sensitive to central bank moves, traders navigating yuan-based instruments should take this consistent strategy into account. The divergence between forecasts and actual central rates has not been random, and if the past few months are anything to go by, it is unlikely to change course suddenly.

The UK is expected to reach a trade deal with the United States shortly. This agreement aims to address tariff issues, which are viewed as matters of fairness rather than inflation.

The UK has successfully navigated potential challenges from the previous US administration. This avoidance of threats demonstrates a level of resilience in the UK’s trade approach.

This development is expected to remove some uncertainty around costs for businesses that sell goods across the Atlantic. By ironing out tariff disagreements, firms in both countries may find it easier to plan ahead, reducing unexpected expenses. We have seen how past US administrations have used tariffs as leverage, sometimes causing disruptions. Avoiding those risks allows businesses to operate with more confidence.

At the same time, financial markets are responding to signals from central banks. Policymakers in both countries have been clear that interest rates will not be cut hastily. Inflation remains a concern, even if it is not the primary focus of this particular agreement. Investors are adjusting their expectations accordingly. Some had hoped for quicker rate reductions, but recent comments suggest patience will be necessary.

John has noted that market pricing does not fully reflect this stance. This means some investors could be caught off guard if rate cuts take longer than expected. While inflation is lower than last year, it has not disappeared. The hesitation from central banks makes sense given the data. We should be watching economic releases closely, as any surprises in wage growth or consumer spending could lead to sharper shifts in expectations.

Sarah pointed out that currency markets have been reacting swiftly to interest rate speculation. The pound has seen periods of strength, largely due to expectations that the Bank of England will hold rates higher for longer. This has weighed on some UK-based exporters, though importers have benefited. The dollar, meanwhile, remains sensitive to economic data from the US, with each jobs report and inflation update carrying more weight than usual.

James highlighted that equity markets are not pricing in much risk at the moment. Volatility has been relatively low, and there is confidence that corporate earnings will hold up. However, any unexpected moves in interest rate expectations could easily shake this stability. A sudden shift in bond yields, for example, could force investors to reassess stock valuations.

We will need to stay alert for any comments from central bankers in the coming weeks. Policymakers have been cautious with their messaging, but any sign that they are reconsidering their stance could lead to rapid changes in asset prices. Data will be the deciding factor. If inflation figures come in higher than expected, markets will have to adjust quickly.

The NZD/USD has experienced selling pressure, dropping to approximately 0.5620 in early Asian trading. This movement coincided with US tariff announcements from President Trump, including a 25% tariff on goods from Mexico and Canada, and an additional 10% on Chinese imports.

Concerns over these tariffs have negatively impacted the New Zealand Dollar, as China is a primary trading partner. The US economy’s GDP grew at a 2.3% annual rate in Q4, aligning with market expectations and causing the Greenback to strengthen.

Dairy prices and economic data from New Zealand play important roles in influencing the NZD’s value. Additionally, broader market sentiment can impact the currency’s performance, with risk-on periods tending to favour the Kiwi.

This morning’s dip in the NZD/USD exchange rate to around 0.5620 comes at a time when fresh US tariffs are causing uncertainty across financial markets. With Washington imposing a 25% levy on imports from Mexico and Canada, alongside an extra 10% duty on Chinese goods, we’re seeing traders reassess risk exposure. This announcement also means investors are weighing the broader impact such policies may have on global trade flows and economic growth.

For traders watching the Kiwi, it’s clear the connection to China can’t be ignored. Beijing takes in a large share of New Zealand’s exports, so any disruption to Chinese trade could have knock-on effects on demand. With this in mind, the recent strength of the Greenback is also reshaping trading dynamics. The latest US GDP data shows a 2.3% annualised growth rate for Q4, which came in line with forecasts, giving the dollar further momentum.

Market participants should keep an eye on upcoming economic indicators out of New Zealand. Dairy prices, in particular, tend to play a major role in shaping expectations for the Kiwi, given the commodity’s place in the country’s exports. Broader risk sentiment is another factor we need to account for in the weeks ahead—historically, when investors show appetite for risk, NZD has benefited. However, ongoing trade uncertainties and a stronger US dollar could make it more difficult for the currency to gain ground in the near term.

With volatility in focus, traders should remain alert to any shifts in global growth expectations and policy developments. Inflation data and central bank rhetoric will add further layers to the market’s response, requiring a measured approach when considering positioning.

OpenAI is currently livestreaming the launch of ChatGPT 4.5, which will be available to Pro users this week and Plus users next week. Deep Research has received positive reviews.

Today has been noteworthy in the market, as Nvidia reported earnings that exceeded expectations but experienced a 6.3% decline after hours. The simultaneous release of OpenAI’s new model and strong Nvidia results has not positively impacted the market.

Previously, combined positive announcements from OpenAI and Nvidia would result in a 3% market increase. OpenAI has also indicated that GPT 5 will be its final “non-chain-of-thought model.”

The release of OpenAI’s latest model alongside Nvidia’s quarterly results brought anticipation, yet the market’s response has been less optimistic than many had hoped. A drop of 6.3% in Nvidia’s stock after hours, despite surpassing earnings expectations, suggests that broader sentiment is not aligning with the strength of the reported figures. This comes as a contrast to previous instances where upbeat news from both companies led to upward movement.

We recognise a shift in how traders are positioning themselves. The assumption that favourable updates from OpenAI and Nvidia would lead the market higher is no longer holding. In past quarters, similar events resulted in an approximate 3% rise, but the current reaction implies adjustments in expectations or other forces at play. Nvidia’s continued outperformance in earnings no longer guarantees price gains, which suggests that participants are focusing on factors beyond revenue and guidance.

OpenAI’s confirmation that GPT-5 will be the last major release without chain-of-thought reasoning adds another layer to the equation. Forward-looking bets on artificial intelligence development will have to account for structural changes in model architecture rather than simply incremental improvements. Those familiar with past updates will recall that prior leaps in AI capability generated wide speculation, often fuelling short-term rallies.

Market conditions have deviated from the patterns seen over the last year. The reaction to Nvidia’s results suggests traders with large positions have started adjusting their strategies. If this week had played out as it did in previous quarters, we would have seen a rally. Instead, downward pressure dominated after hours.

With OpenAI pushing deeper into advanced reasoning and Nvidia still at the centre of AI hardware, their announcements remain highly relevant. However, the broader response suggests that expectations are not solely tied to earnings beats or new releases. Traders should remain mindful that prior behaviours in the market may not repeat, and any positions that rely on past trends continuing unchanged could be exposed to added risk.

President Donald Trump announced on social media that tariffs of 25% on Mexico and Canada will begin on March 4, ahead of the previously mentioned April 2 date. He also plans to impose an additional 10% tariff on Chinese goods on the same day.

White House officials discussed upcoming “reciprocal tariff” packages targeted at various countries, including the UK and the European Union. Furthermore, Trump expressed interest in a rare earths deal with Ukraine as part of efforts to address the ongoing conflict in the region.

Bringing forward the start date for tariffs on Mexico and Canada to early March, rather than April, will force markets to adjust more quickly than expected. A 25% levy on goods from both countries means businesses that rely on their exports will face higher costs just as they were preparing for a later deadline. This acceleration leaves less time for industry players to mitigate the impact, and short-term volatility could be stronger than previously thought.

Adding a 10% tariff on Chinese imports on the same day increases the pressure further. Tariffs on China were already high following earlier trade disputes, but this new development adds another layer of complexity. If companies pass the costs on to consumers, inflation could tick upwards. Meanwhile, industries dependent on Chinese materials or components will need to reassess supply chains, and traders will likely see more abrupt price movements.

Officials at the White House have also put forward plans for “reciprocal tariff” measures aimed at the UK and the EU. This wording suggests that these new measures will be a calculated response to trade barriers already in place rather than broad-based duties. Since Europe remains a key trade partner, these steps may affect investor sentiment towards industries with deep transatlantic ties. Export-heavy firms will likely be pricing in potential challenges faster than they had anticipated.

Donald has also indicated an interest in negotiating a rare earths deal with Ukraine. This comes at a time when rare earth elements are already shaping geopolitical strategies due to their importance in high-tech production. More large-scale shifts in supply chains could follow if Washington moves forward with this plan, particularly for sectors like renewable energy and semiconductors.

Short-term movers in derivative markets will need to watch for erratic price action as information flows in, particularly in those sectors most exposed. Equities tied to manufacturing, technology, and commodities may show sharper swings, with heightened options activity around firms involved in transatlantic and China-facing trade. Timing adjustments will matter more than usual as policy announcements start affecting valuations earlier than expected. Strategies designed for an April roll-out may need to be pulled forward, and risk management will need greater precision in the coming weeks.