Cocoa prices have experienced a notable decline, with London cocoa falling nearly 11% and reaching its lowest level since November. This drop is attributed to expectations of a supply surplus following three seasons of deficit.

The International Cocoa Organization forecasts a global supply surplus of 142,000 tonnes for the 2024/25 season, driven by increased production and reduced demand due to higher prices. Additionally, Australia’s Bureau of Agricultural and Resource Economics and Sciences states that the winter wheat harvest for 2024/25 rose by 31% year on year to 34.1 million tonnes, benefiting from significant increases in New South Wales and Western Australia.

Shift In Cocoa Market Sentiment

The sharp decline in London cocoa prices reflects a shift in sentiment following concerns over prolonged supply shortages. After three consecutive years of deficit, markets are now responding to projections of surplus, which has led to a sell-off. The International Cocoa Organization estimates the surplus to reach 142,000 tonnes in the upcoming season, suggesting a fundamental change in supply dynamics.

Hedge funds and other market participants who had previously positioned for scarcity may be forced to adjust their strategies as expectations realign. If the projected surplus materialises, it would ease pressure on buyers, potentially leading to a period of lower volatility. However, production forecasts are never guaranteed—weather, pests, and geopolitical factors remain unpredictable.

Meanwhile, Australia’s wheat output has surged, buoyed by optimal growing conditions in key regions such as New South Wales and Western Australia. A 31% jump in production means global wheat supplies will be bolstered, affecting pricing and trade flows. The expansion in supply could temper upward pressure on global grain markets, particularly if demand growth fails to match output gains.

Impact On Global Trade

Looking ahead, traders need to monitor how European and American buyers react to lower cocoa prices. A price drop of this scale could stimulate demand recovery, but consumer behaviour has been sluggish in previous periods of elevated costs. Watching for shifts in purchasing patterns from major chocolate producers will offer insights into whether this decline results in stronger buying activity or if industry players remain cautious.

Likewise, wheat traders will want to assess global export trends. A stronger Australian harvest introduces fresh competition for other wheat-exporting nations, potentially squeezing sellers reliant on overseas demand. Whether this surplus affects pricing hinges on how importers, particularly in Asia and the Middle East, decide to allocate future purchases.

With both cocoa and wheat markets adjusting to newfound supply increases, pricing strategies will need to reflect changing sentiment. Those positioned on the wrong side of these moves may face pressure, while those who time their entries correctly could capitalise on shifting conditions. Monitoring production reports and tracking inventory data will be key to navigating the weeks ahead.

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Japan’s Prime Minister Shigeru Ishiba stated that the country is not pursuing a currency devaluation policy. He also mentioned that he has not received any official communication from Donald Trump concerning foreign exchange policy.

Ishiba has made it clear that Japan is not attempting to weaken its currency. His remarks push back against any suggestion that the government is taking steps to drive the yen lower to gain a trade advantage. At the same time, he addressed another key point—there has been no direct message from Trump about exchange rate concerns.

Global Focus On Currency Movements

Given the global focus on currency movements, these comments matter. A weaker yen makes Japanese exports more competitive abroad, something that could draw attention from trading partners. If markets believed Japan was actively pushing its currency lower, that could lead to pressure from other countries to adjust policy. Ishiba’s words seem aimed at preventing such tensions from escalating.

For traders navigating these shifts, the message to take away is that Tokyo is not trying to manipulate exchange rates to boost growth. That reduces the likelihood of direct government intervention to weaken the yen, at least for now. If external factors push the currency higher or lower, policymakers may respond, but there appears to be no immediate desire to steer it in one direction.

Trump’s lack of communication on the matter also stands out. In the past, his administration has not hesitated to comment on exchange rate policies when they believe a country is gaining an unfair advantage. The absence of criticism or formal requests suggests Washington is either unconcerned or focused on other matters. Markets tend to react strongly to shifts in US policy, so for now, the lack of direct pressure on Japan removes one possible source of volatility.

With these factors in mind, traders should factor in the possibility that currency moves in the coming weeks could be driven more by external conditions than by Tokyo’s direct actions. If there was concern about an official push to weaken the yen, Ishiba’s comments provide some reassurance that such a move is not on the table. However, that does not mean exchange rate fluctuations will be absent. Economic data, interest rate expectations, and international developments will continue to have an impact.

Market Trends And Speculation

For now, the government’s neutral stance allows traders to focus more on underlying market trends rather than speculation about policy moves. But as always, shifts in political priorities or unexpected statements could change the direction swiftly.

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The S&P Global Manufacturing PMI for Greece decreased to 52.6 in February, down from 52.8 recorded previously. This change indicates a slight contraction in the manufacturing sector’s activity.

Additionally, EUR/USD has risen above 1.0500 amidst concerns about the US administration’s trade policies affecting the dollar. GBP/USD has also climbed to over 1.2700, reflecting its strongest position since December due to selling pressure on the US currency.

Gold Prices And Market Reactions

Gold prices increased to $2,920 as market reactions to trade tensions intensify. Meanwhile, major cryptocurrencies like Bitcoin and Ethereum have seen declines after speculative trading following recent announcements.

US tariffs of 25% on Canada and Mexico, and 10% on China, have begun, alongside the suspension of military aid to Ukraine.

The dip in Greece’s manufacturing PMI to 52.6 from 52.8 suggests that the country’s manufacturing output grew at a slower pace rather than contracting outright. While still above the 50-mark that separates expansion from contraction, this mild decline could indicate diminishing momentum. Traders monitoring economic health might weigh how this plays into broader European trends, particularly as manufacturing sectors across the continent grapple with demand fluctuations.

In currency markets, the US dollar has weakened, pushing EUR/USD above 1.0500 and GBP/USD above 1.2700. The pressure appears to stem from concerns about Washington’s recent trade policies, which have sparked investor caution. With these policies setting fresh constraints on global trade, traders may assess further shifts in risk sentiment. If capital outflows from the dollar persist, the market could see heightened volatility across major pairs.

Gold’s push to $2,920 follows increased nervousness over trade policy impacts. Historically, uncertain trade conditions have driven investors towards assets viewed as safer, and we see that trend playing out here. This movement suggests expectations of further caution in the financial system. Market participants should evaluate whether momentum carries gold higher or if profit-taking interrupts the rally.

At the same time, cryptocurrencies have moved in the opposite direction, with Bitcoin and Ethereum seeing declines. This fall follows speculative buying in response to recent announcements, and the pullback could indicate traders reassessing positions after an initial wave of enthusiasm. Those engaging with digital assets may need to keep a close watch on sentiment shifts, as abrupt reversals have been common within the sector.

Impacts Of Trade Tariffs

The newly imposed tariffs—25% on Canada and Mexico, along with a 10% rate on China—have now come into effect alongside a halt in military aid to Ukraine. Trade restrictions of this scale tend to have ripple effects, and we may soon see adjustments in supply chains and cost pressures reflected across different asset classes. These developments merit close attention, particularly for those assessing risk exposure in equities, commodities, and currency markets.

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Japan’s Prime Minister Ishiba stated that the country is not engaging in a currency devaluation policy. He mentioned that he has not received any communication from Trump regarding foreign exchange policy.

Over the last decade, Japanese authorities have consistently defended their loose monetary policy as a measure against deflation and low inflation, asserting that the weaker yen is merely a consequence. This position has been communicated to G7 partners, with no public dissent from any member, including the United States.

Japan’s Stance On Currency Policy

Ishiba’s remarks reinforce what we have seen from Tokyo for years: policymakers insist that the yen’s depreciation is a by-product of domestic economic measures rather than an intentional effort to weaken the currency. This line has been maintained in international discussions, with no direct pushback from other major economies.

Washington’s response remains unclear. If there had been explicit concerns from the White House, we would likely have seen some indication from either government. That absence suggests that, at least for now, currency policy is not a pressing issue in US-Japan relations. However, past disputes over exchange rates show that this can change quickly, particularly if economic conditions shift in a way that draws renewed attention to currency movements.

For those monitoring market movements, what matters is how authorities in Tokyo act rather than what they say. Historically, statements denying intervention do not always align with reality. Japanese officials have a track record of verbal intervention—publicly downplaying the country’s influence on the exchange rate while taking steps to guide it privately. That pattern means traders should approach official remarks with a degree of scepticism.

If pressure on the yen intensifies, policymakers could take stronger steps under the justification of maintaining orderly market conditions. Any move in that direction would likely be framed as an effort to curb excessive volatility rather than a shift in currency policy. Given past behaviour, a sharp decline in the yen could prompt at least some form of response, even if officials continue to insist that their actions are unrelated to targeting the exchange rate.

Market And Policy Outlook

Market participants should also be mindful of policy signals emerging from the US. While there has been no overt challenge to Japan’s stance so far, the potential for a shift remains. If Washington were to introduce measures linking trade and foreign exchange policies more directly, that could inject further uncertainty into yen positioning.

With the yen’s direction dependent on both domestic and international dynamics, staying alert to both policy actions and political rhetoric will be necessary. Official statements provide a reference point, but they are not always a clear indicator of what will happen next. Traders who pay close attention to both words and actual decisions will be better prepared for what comes next.

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The Swedish krona is outperforming other G10 currencies, boosted by optimism surrounding a potential Ukraine-Russia peace deal and increased EU spending. The rally in European equities is contributing to the krona’s strength this week.

Currently, EUR/SEK is trading near the 11.00 support level, with expectations of a potential break lower in the near term. Upcoming European Central Bank decisions and Swedish inflation data could influence the outlook for the krona, although lasting strength is uncertain.

Potential Market Influences

Factors such as US tariffs and a possible equity market correction may weigh on the currency. The expectation remains that EUR/SEK will remain above 11.00 this summer.

The krona’s strong performance relative to its G10 peers is a reflection of growing optimism in financial markets. Hopes for a resolution in Ukraine, coupled with the European Union’s plans for increased spending, have encouraged demand for risk-sensitive assets. This enthusiasm is also visible in European stocks, which are on the rise, reinforcing support for the Swedish currency.

At the moment, EUR/SEK finds itself near a critical threshold of 11.00. Many anticipate that it could dip below this level in the short term, but key events on the horizon, such as policy decisions from the European Central Bank and Sweden’s latest inflation figures, could shape the direction from here. While these elements have the potential to influence sentiment, doubts remain as to whether any strength in the Swedish currency will persist.

External risks cannot be ignored either. Potential trade measures from the US, particularly in the form of tariffs, pose a threat, and a correction in stock markets could further dampen enthusiasm for the krona. Market participants still expect the exchange rate to stay above 11.00 through the summer months, despite current momentum.

Considerations For Traders

For those engaged in derivatives trading, all these moving pieces should be weighed carefully in positioning. Given the proximity of EUR/SEK to key price levels, volatility could present both opportunities and risks in the weeks ahead. Monitoring inflation trends and upcoming central bank updates will be essential in understanding whether this currency strength is a temporary spike or the beginning of a more prolonged shift.

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NASDAQ futures are currently trading at 20,527 and are testing key resistance levels. For traders, structured price levels serve as vital tools for managing risk and spotting trade opportunities.

If NASDAQ futures continue to rise, resistance levels to watch include $20,546 – $20,547, and $20,629 – $20,666, where selling pressure may increase. Additional notable resistance levels are $20,717, $20,743 – $20,745, and $20,770, with $20,900 marking a critical inflection zone.

Key Support Levels

Should prices decline, support areas to consider are $20,560 – $20,535 and $20,460 – $20,440, with $20,370 and $20,230 also serving as important support points.

This price map assists traders in making informed decisions based on market behaviour. It is advisable to conduct personal research and adhere to individual trading strategies and risk management protocols.

NASDAQ futures remain near resistance levels that have already been tested, which could suggest that traders are being cautious before making further moves. The price action in the coming sessions will be telling—either momentum carries through these barriers, or sellers take control, forcing a retreat.

Recent trades near $20,527 show the market is probing key areas where past price action resulted in reversals. The next significant challenge is in the $20,546 – $20,547 range, where upward progress may encounter stalling. A successful push through would bring $20,629 – $20,666 into focus, a region where sellers could reappear. Should these barriers fail to hold, $20,717 and $20,743 – $20,745 could act as the next key areas where buyers might struggle to maintain control. A further stretch beyond these levels would shift attention towards $20,770 and, ultimately, $20,900—an area where price friction has surfaced before.

On the downside, if weakness emerges, buyers may step in between $20,560 – $20,535, a range that previously acted as a short-term turning point. Below that, $20,460 – $20,440 could provide another test for market sentiment. Any drop past these thresholds puts $20,370 in focus, with $20,230 serving as a deeper layer of support for those searching for renewed buying interest.

Trading Strategy Considerations

Each of these levels provides structure to an otherwise fluctuating market, helping traders determine areas where price reactions may occur. Keeping positions within a well-defined risk framework remains essential. Market conditions remain fluid—remaining adaptable ensures that adjustments can be made as price movement unfolds.

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The Australian Dollar (AUD) is expected to trade between 0.6190 and 0.6250 against the US Dollar (USD). A break below 0.6190 may lead to a decline towards 0.6155.

In the short term, AUD traded within a wider range than predicted, closing at 0.6225 after reaching 0.6204/0.6255. The forecast for today remains within the 0.6190 to 0.6250 range.

Key Resistance And Support Levels

For the upcoming weeks, AUD must remain below 0.6285, which is designated as a resistance level. The next major support below 0.6190 is identified at 0.6155.

The Australian currency has been fluctuating within a somewhat predictable band, with movements staying relatively contained. The lower boundary at 0.6190 has held for now, but should that level give way, there is potential for further weakness towards 0.6155. On the other hand, resistance has been established at 0.6285, presenting a barrier any upward movement must surpass to shift the broader direction.

We have observed that in the short term, it moved within a wider range than initially anticipated. It briefly touched 0.6204 and 0.6255 before closing at 0.6225. Today’s outlook suggests a continuation of this contained movement, with the same levels remaining in focus. However, should the lower range not hold, further downside pressure could emerge.

Trading Strategies And Considerations

Over the next few weeks, the expectation is that levels below 0.6285 will keep rallies in check. If upward pressure increases and this level is convincingly breached, sentiment could shift. However, as long as prices stay under this threshold, the downside risk remains. The key level to watch below remains 0.6190, with 0.6155 acting as the next major point of support.

For traders navigating this environment, keeping a close watch on both these boundaries is necessary. Sharp movements through either may indicate shifts that could guide future trades. Until we see a definitive breakout, the range-bound behaviour is likely to persist.

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Analysts from Commonwealth Bank of Australia anticipate that rate cuts from the Reserve Bank of Australia will not occur until later in the year. They project three 25 basis point cuts to take place in May, August, and November 2025.

Commonwealth Bank of Australia analysts expect the Reserve Bank of Australia to hold off on lowering interest rates until much later. They foresee three reductions, each by a quarter of a percentage point, set for May, August, and November of next year.

Impact On Borrowing Costs

This suggests that borrowing costs in Australia will remain where they are for some time, providing fewer immediate changes for those tracking rate movements. With the RBA keeping rates steady in the near term, present conditions will persist, forcing markets to adjust expectations accordingly.

For traders, this means upcoming decisions should factor in how long tighter monetary policy could last. If there are no shifts in guidance from officials, expectations of lower rates would likely be pushed further down the line. Any fresh data on inflation or employment will be central, especially if those figures move in unexpected directions.

We have seen how quickly market sentiment can shift when policymakers introduce new signals. Any deviation from current forecasts may bring unexpected moves, especially if economic indicators suggest inflationary pressures are fading faster than the central bank currently anticipates. However, if figures remain elevated, officials may delay any reductions even further.

Outlook For Traders

For now, nothing indicates immediate change. Traders gauging potential shifts should consider what stalled rate adjustments mean for different markets, as well as how they could influence longer-term expectations.

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The US Dollar Index (DXY) has seen a decline for two consecutive sessions, currently trading around 106.30 during European hours. Demand for the US Dollar remains supported by heightened risk aversion due to increasing global tariff tensions.

On Monday, President Trump signed an order to raise tariffs on Chinese imports to 20%, while similar actions for Mexico and Canada are still under consideration. The US will implement reciprocal tariffs on nations that impose duties on its goods starting April 2.

Canada plans to introduce 25% retaliatory tariffs on US imports if the US tariffs proceed. China’s Commerce Ministry has also indicated it will take necessary countermeasures to protect its interests.

Impact Of Trade Disputes

Despite ongoing trade issues, the US Dollar experiences downward pressure as optimism over a potential peace deal in Ukraine reduces demand for safe-haven assets. Support from European leaders for security guarantees for Ukraine has enhanced global market risk sentiment.

Recent US economic data displayed mixed results. The ISM Manufacturing PMI fell to 50.3, below the forecast of 50.5 and down from January’s 50.9, while S&P Global’s final Manufacturing PMI for February improved to 52.7, surpassing expectations.

Attention is now focused on key US labour data, with the ADP employment report due on Wednesday and the Nonfarm Payrolls report on Friday, both of which could influence the Federal Reserve’s interest rate outlook.

Markets are currently navigating through a number of challenges, each influencing the value of the US dollar in different ways. On the one hand, trade disputes continue to escalate, particularly between the United States and China, with new tariff measures adding layers of uncertainty. Although these tensions typically drive demand for safer assets, the US dollar has lost some strength over the past two days. This suggests that other factors are playing a stronger role in determining its movement.

It is worth noting that the decision to raise tariffs on Chinese imports, now set at 20%, adds further pressure to global trade relations. There is also the possibility that similar measures will be applied to goods from Mexico and Canada, though no final decisions have been announced. Retaliation from both these countries, as well as from China, is expected. Canada has already laid out plans to impose a 25% duty on certain US imports, and Beijing has indicated it will act to protect its interests. This tit-for-tat strategy historically leads to increased volatility in currency markets.

At the same time, geopolitical events in Europe have exerted downward pressure on the dollar. The possibility of a peace deal in Ukraine has bolstered confidence across global markets, reducing the appeal of safe-haven assets. European leaders backing security guarantees for Ukraine have contributed to an improved sentiment, which in turn has weighed on the US currency.

Recent economic data from the US has been mixed. Manufacturing activity, tracked by ISM, showed a slight decline, coming in at 50.3, which was below both expectations and the previous month’s reading. However, S&P Global’s measure of factory activity exceeded forecasts, climbing to 52.7. With figures sending contrasting signals, traders are now looking ahead to upcoming labour market reports.

Market Reactions And Future Outlook

In the next few days, employment data will draw close scrutiny. The ADP report, due Wednesday, provides a measure of private-sector job growth, while the all-important Nonfarm Payrolls report on Friday will carry weight in influencing expectations for Federal Reserve policy. Any signs of continued strength in hiring could reinforce arguments for keeping interest rates higher for longer. Conversely, if figures show a slowdown, the dollar may see further weakness as traders reprice expectations for future monetary policy adjustments.

For those in the derivative space, these events create opportunities for both short-term positioning and longer-term moves. With multiple forces driving the US dollar in opposing directions, caution remains warranted when planning entries and exits. Understanding which elements hold the greatest sway in the moments leading up to key announcements can make all the difference.

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The Reserve Bank of Australia’s Deputy Governor, Hauser, is scheduled to speak at the Australian Financial Review’s Business Summit in Sydney at 8.45am local time, which corresponds to 2145 GMT or 1645 US Eastern time.

The minutes from the Bank’s February meeting indicate the first rate cut since late 2020, reflecting concerns about downside risks to the economy. The CEO of the Commonwealth Bank of Australia anticipates that further rate cuts may not occur until later in the year, unless global economic conditions worsen significantly.

Market Expectations For The Speech

Hauser’s remarks will likely provide more insight into how the Reserve Bank of Australia currently views inflation trends and financial stability. Market participants will be paying close attention to whether the Deputy Governor reinforces the cautious stance reflected in the central bank’s recent meeting minutes or signals any shift in outlook. Given the timing of the speech, early reactions may be observed in local markets before influencing broader sentiment across currency and bond markets in later sessions.

The February minutes suggest policymakers opted for a measured approach, acknowledging economic pressures that could justify easing while stopping short of committing to a rapid pace of rate reductions. Concerns about global conditions remain, but domestic factors appear to have held greater weight in decision-making. The caution expressed by the Commonwealth Bank of Australia’s leadership aligns with this, as they anticipate any further reductions in borrowing costs to be contingent upon external weakness feeding through to the national economy.

With expectations for the next phase of policy still in flux, traders will be weighing Hauser’s comments for clarity on timing and potential catalysts for further adjustments. Any deviation from the central bank’s prior messaging could drive immediate shifts in pricing for rate-sensitive instruments. If reaffirmed caution prevails, adjustments to expectations may be more gradual, with markets focusing on incoming data to reassess probabilities.

Impact On Markets And Positioning

As the speech unfolds, movements in Australian yields and the dollar should be observed closely. Should Hauser adopt a more resolute tone in favour of caution, the immediate response may be muted, reinforcing existing positioning. However, if a more open-ended view on policy is hinted at, volatility could increase, particularly if investors perceive room for adjustments earlier than previously considered.

Near-term positioning will be shaped by how much weight the Reserve Bank places on external versus domestic risks. If international conditions deteriorate at a faster pace, the probability of earlier easing rises, and today’s speech may offer hints on how the central bank intends to balance these considerations. The coming weeks will likely see traders adjusting positions to account for any recalibration of expectations in response to both this communication and incoming economic data.

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