The Dow Jones Industrial Average (DJIA) gained approximately 150 points on Friday, nearing the 43,400 mark, although it remains below Monday’s opening levels. Tensions arose between US President Donald Trump and Ukrainian President Volodymyr Zelenskyy over a defence agreement and a proposed “rare earths deal.”

The US Personal Consumption Expenditure Price Index showed core inflation easing to 2.6% year-on-year from 2.9%, aligning with market expectations. However, persistent volatility in US inflation factors raises concerns amid fluctuating trade policies, and core metrics remain above the Federal Reserve’s target of 2%.

Trump’s heightened rhetoric on tariffs has raised apprehensions in the market. A new 25% tariff package aimed at Canada and Mexico is set to go into effect on March 4.

Attention will shift to upcoming Nonfarm Payrolls (NFP) data due next Friday, as recent economic indicators suggest a possible slowdown, exacerbated by rising jobless figures.

On Friday, 3M’s shares rose by 1.7% to $153, while IBM’s shares dipped by 2% to below $250. The DJIA trades below the 50-day Exponential Moving Average near 43,840 but remains above the 200-day EMA at around 42,000.

Tariffs serve to aid local producers by providing pricing advantages against imports. They are paid at entry points, distinguishing them from general taxes that consumers pay at purchase. Economists are divided on tariffs; some view them as protective tools, while others argue they could elevate prices and instigate trade wars.

Trump aims to leverage tariffs to bolster the US economy, focusing on Canada, China, and Mexico, which constituted 42% of total US imports in 2024. Mexico was the leading exporter, accounting for $466.6 billion. Additionally, Trump plans to use tariff revenues to reduce personal income taxes.

With markets responding to both economic data and shifting trade policies, the weeks ahead demand close attention. The Dow’s gain of around 150 points provided some upward movement, though it continues to trade below where it stood at the start of the week. Price action remains unstable, and with fresh trade concerns emerging, traders must stay mindful of potential shifts in risk appetite.

Inflation figures have provided mixed signals. While core inflation eased slightly as expected, we cannot ignore the fact that it still sits above the Federal Reserve’s long-standing 2% target. This suggests the Fed is unlikely to rush towards easing monetary policy, leaving rate-sensitive sectors exposed to potential turbulence. Inflation-linked products and interest rate derivatives will require careful hedging as policymakers weigh their options in the coming months.

Washington’s stance on tariffs has once again made its effects felt, with the President’s announcement of new levies directed at Canada and Mexico sparking concern across industries reliant on cross-border supply chains. With a 25% tariff package scheduled for enforcement from early March, we should anticipate responses not just from affected businesses but also from policymakers in Ottawa and Mexico City. Those trading in commodity-linked derivatives and currency pairs tied to the Canadian dollar and Mexican peso should factor possible retaliatory measures into their strategies.

Labour market data, particularly the Nonfarm Payrolls report due next Friday, stands as one of the most closely watched indicators in the near term. Recent rises in jobless claims may hint at slower growth, prompting speculation about the wider employment picture. If payroll figures disappoint, pressure may mount on the Fed to adjust its position, generating movement in bond yields and equity markets alike. Markets have already begun positioning for possible volatility, with traders watching whether wage growth figures indicate further inflationary risks or a cooling economy.

Individual stocks reflected the broader uncertainty, with some large names diverging in performance. 3M’s shares made modest gains, while IBM edged lower, continuing a recent downward trend. The DJIA remains stuck between key technical levels, with the 50-day Exponential Moving Average acting as a resistance point near 43,840. However, longer-term support around 42,000, defined by the 200-day EMA, remains intact. Positions in index futures should keep both levels in sight when planning risk exposure in the coming sessions.

The debate over trade policy remains fierce, particularly as tariffs shift cost structures in global markets. By raising import costs at entry points, domestic industries can benefit from reduced competition—but that protection comes with potential drawbacks, including higher prices for manufacturers reliant on foreign components. The effectiveness of such measures is widely debated among economists, with some arguing that they enhance economic independence, while others see them as inflationary policies that could strain consumer purchasing power.

The President has made it clear that tariffs will play a pivotal role in his economic strategy, particularly against major import sources such as Canada, China, and Mexico. These three countries combined accounted for over two-fifths of total US imports, giving trade policy a direct impact on a large segment of the domestic economy. The stated aim of directing tariff revenues towards cuts in personal income taxes adds another layer to fiscal strategy, with implications for government revenue trends and personal spending dynamics.

With markets absorbing the implications of current policy shifts, volatility will likely remain heightened. Economic data releases and potential retaliatory actions from impacted trading partners merit close observation, ensuring traders take informed positions as conditions shift.

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Cable has reached a ten-day low with the GBP/USD pair declining 40 pips to 1.2560. This drop follows a complete three-candle reversal, reflecting current market sentiment and uncertainty in Europe.

Recent developments in the Oval Office may indicate deeper divisions across the Atlantic. The UK is facing difficulties in navigating this complex political landscape as it responds to these challenges.

This downward move in Cable suggests traders are reassessing expectations. The three-candle reversal is not just a technical pattern—it reflects shifting attitudes towards risk. When such formations appear, especially after a period of relative stability, it often signals wavering confidence. The 40-pip decline reinforces this hesitation, showing that momentum has turned against the pound for now.

Political events across the Atlantic are adding an extra layer of uncertainty. With debates intensifying in Washington, the UK’s position grows more precarious. Changes in trade policy or diplomatic shifts could alter investor sentiment almost overnight, making it even harder to predict GBP movements. We must recognise that investors will respond quickly to any potential friction, and that will feed directly into short-term volatility.

Beyond politics, economic indicators are failing to provide much reassurance. Inflation data remains mixed, and while core numbers have softened, wage growth signals underlying pressures. This creates a difficult environment for monetary policymakers, as they try to balance stability with longer-term growth. Traders will be watching closely for any adjustment in forward guidance, because even the slightest change in narrative could push markets sharply in either direction.

Across the Atlantic, central bank speakers continue to reinforce their cautious stance, limiting potential upside in risk-driven assets. Recent comments have kept expectations in check, putting pressure on assets tied to global sentiment. This difference in central bank approaches has widened rate divergence, making GBP less attractive when compared to alternatives.

In the near term, technical barriers continue to limit recovery attempts. The 1.2560 level has already acted as a floor during earlier sessions, but how long that holds remains uncertain. If selling pressure builds, further declines cannot be ruled out. On the other hand, a move above recent resistance might attract buyers, but broader conditions suggest rallies will struggle.

Economic releases in the coming weeks will play a direct role in shaping the next move, with labour market data and inflation readings carrying heavier weight than before. These figures will guide traders on whether the current trend has further to run or if sentiment is due for a shift. With liquidity conditions gradually changing, we can expect sharper moves as positioning adjusts.

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The Mexican Peso (MXN) weakened against the US Dollar (USD) on Friday, marking a weekly decline of over 0.59%. The USD/MXN rate is currently at 20.52, with pressures stemming from upcoming US trade policies including tariffs on Mexico.

Data released for Mexico revealed a Balance of Trade deficit of $4.55 billion in January, contrary to December’s surplus, while the Unemployment Rate increased to 2.7%. Traders are also processing US tariffs of 25% on Mexico and Canada set for next week.

The Core Personal Consumption Expenditures (PCE) Price Index in the US rose by 0.3% month-on-month, with annual inflation easing to 2.6%. Speculation suggests potential easing in Federal Reserve policy may occur by 58 basis points in 2025.

The Peso’s value is influenced by economic performance, foreign investment, and remittances, as well as geopolitical factors like nearshoring. Oil prices also play a significant role, given Mexico’s status as a major exporter.

Banxico aims to maintain stable inflation around 3%. Macroeconomic data releases are critical, impacting the Peso’s valuation. A strong economy encourages foreign investment and could prompt interest rate hikes, while weak data may lead to depreciation.

As an emerging-market currency, the Peso typically performs well during favourable market conditions but often struggles amid economic uncertainty.

The drop in the Peso against the Dollar last Friday did not go unnoticed, with the currency losing over half a percent over the course of the week. At 20.52 to the Dollar, the exchange rate reflects growing concerns, particularly surrounding forthcoming trade measures from the US. When such policy changes loom, traders must carefully assess their positions.

The latest trade data from Mexico came as an unpleasant surprise, revealing a deficit of $4.55 billion in January, a stark contrast to December’s surplus. This shift raises questions about broader economic stability. Add to this a rise in unemployment to 2.7%, and it is clear why some investors may be hesitant. Trade balances often dictate demand for a currency, and a sudden move from surplus to deficit can alter expectations rapidly.

North America’s trade framework is now under scrutiny, as fresh US tariffs are set to take effect next week. A 25% levy on Mexican and Canadian goods could reshape cross-border economics, with potential repercussions on Peso demand. Businesses dependent on exports will likely feel the pressure, and weaker sentiment towards Mexico’s trade prospects could weigh on the currency further.

On the US side, inflationary signals continue to provide mixed interpretations. The Core PCE Price Index climbed by 0.3% versus the previous month, but annualised inflation eased to 2.6%. Inflation trends in the US influence Federal Reserve decisions, and speculation has already surfaced about monetary policy relief in 2025, with estimates of a 58 basis point cut. If this outlook remains intact, the Dollar’s strength could wane over time. However, such shifts are rarely straightforward, meaning traders must remain flexible.

For the Peso, multiple factors come into play, ranging from Mexico’s economic health to foreign investment levels. Remittances remain a vital income source, while oil prices also factor in due to the country’s status as a key exporter. Price swings in commodities can quickly reshape demand for the Peso, creating volatility that traders must stay ahead of.

Banxico continues its commitment to inflation stability, aiming to anchor it near 3%. Monetary policy remains tightly linked to economic data, with strong performance potentially warranting higher interest rates, which might attract foreign investment. On the other hand, weak reports tend to have the opposite effect, weighing on the currency as investor confidence pulls back.

Being an emerging market currency, the Peso sees strong performance during periods of economic optimism. In more uncertain environments, however, it can falter, particularly when global risk appetite declines. Those actively involved in the markets should closely monitor upcoming trade adjustments and Fed rate expectations, as these will influence short-term price action.

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Trump described a recent meeting with President Zelensky as meaningful but expressed concerns regarding Zelensky’s approach to peace negotiations involving the United States. He stated that Zelensky seems to believe American support offers an advantage, stating that he seeks peace rather than an upper hand.

Trump also remarked that Zelensky disrespected the Oval Office and indicated that he would only welcome him back when he is prepared to pursue peace. Following this exchange, US stocks reached their lowest point of the day, and a planned press conference was subsequently cancelled.

Such remarks inevitably carry weight, with markets often reacting in real-time to the broader implications of diplomatic tensions. When Donald voiced dissatisfaction with Volodymyr’s stance, investors immediately reassessed their positions, leading to a downturn in equities. The perception that Washington’s backing might be leveraged rather than purely strategic injected fresh uncertainty into an already fragile situation.

The cancellation of the scheduled press conference removed an opportunity for a more measured response that could have tempered market unease. Without additional clarification, traders were left to speculate about potential shifts in policy, prompting them to adjust portfolios accordingly. This uncertainty was reflected in the decline seen across indices, with selling pressure intensifying as concerns spread.

In moments like this, sentiment can turn swiftly. These developments reinforced a pattern observed in recent months—any indication of strained relations or abrupt changes in rhetoric tends to ripple through financial markets. The sensitivity surrounding these discussions suggests that we may soon see adjustments in hedging strategies. Holding positions at previous levels without accounting for political risk would be out of step with how recent statements have reverberated across asset classes.

Donald’s insistence on a different approach to negotiations introduces another layer of unpredictability. If Volodymyr chooses to soften his stance in response, we could see a recovery in confidence. However, any further discord may push volatility higher, particularly as traders attempt to gauge how Washington’s foreign policy stance could shift.

Watching for follow-up statements from officials could provide answers to lingering doubts. Sudden moves in futures or options activity may indicate how institutional investors expect the situation to unfold.

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Chicago Fed President Austin Goolsbee advises against overly optimistic expectations regarding the impact of productivity. He emphasises the challenges the Federal Reserve may face if these anticipations do not align with actual outcomes.

Austin warns against assuming that productivity gains will effortlessly ease inflationary pressures. If businesses and workers do not see the expected improvements, the Federal Reserve could find itself in a difficult position. Interest rate decisions depend on how inflation responds, and if expectations run ahead of reality, adjustments may be needed.

Inflation remains a key concern. Economic data has been mixed. Some reports show easing price pressures, while others suggest lingering risks. If inflation does not slow as anticipated, policymakers may have to keep interest rates higher for longer. That would affect borrowing costs, investment decisions, and overall financial conditions.

Austin’s remarks carry weight. He reminds us that productivity growth is difficult to predict. Some view technological advances as a long-term driver of efficiency, but the short-term effects can be uncertain. If businesses do not see immediate benefits, cost pressures may persist.

Market participants must be careful. Interest rate decisions depend on real data, not assumptions. Optimism about productivity could mean expecting lower rates too soon. That could lead to mispricing risks, especially if inflation remains stubborn.

Other policymakers have also provided insights. Some see reasons for optimism, while others urge patience. Economic growth continues, but not at an even pace. Employment figures remain strong, yet wage growth still feeds into cost pressures.

Financial markets are sensitive to these developments. If expectations diverge from reality, adjustments could be sudden. The next few weeks will provide new data points, and each release will shape the path forward.

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The Baker Hughes oil rig count in the United States has increased from 487 to 489. This change reflects ongoing developments in the oil industry and drilling activity.

The EUR/USD currency pair has remained near 1.0400 following the release of US PCE inflation data for January. Meanwhile, Gold has dipped to fresh multi-week lows below $2,840, influenced by uncertainty regarding trade policies.

GBP/USD maintains a positive trend just above 1.2600 after the same inflation release. Furthermore, the upcoming week will see attention on US payrolls and an ECB rate meeting.

The latest figures from Baker Hughes show a slight increase in active oil rigs, which hints at more drilling activity. Although the rise was minor, it adds to the broader picture of how supply dynamics might shift in the weeks ahead. More rigs usually signal expectations of steady or stronger demand, but it remains to be seen whether this upward trend continues or if it merely reflects temporary adjustments by producers.

Meanwhile, the euro remains near 1.0400 against the dollar. This stability follows the latest US PCE inflation figures, which traders often watch closely for clues on interest rate expectations. Inflation data like this impacts decisions from the Federal Reserve, meaning it has a strong influence over currency pairs like EUR/USD. Any deviation in future inflation readings could lead to more movement in the market.

Gold is under pressure, dropping to levels not seen in several weeks. The recent decline below $2,840 suggests that traders are weighing a combination of policy uncertainty and broader market sentiment. Safe-haven demand can fluctuate based on risk appetite and central bank signals, so further weakness or recovery will likely hinge on upcoming events in the economic calendar.

Sterling continues to hold just above 1.2600, maintaining strength in response to the same PCE inflation data that moved other assets. Looking ahead, focus will shift to US payroll figures, which often bring volatility, along with the European Central Bank’s next rate decision. These events could present new opportunities, particularly if payroll figures surprise markets or if policymakers in Frankfurt signal a shift.

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US 10-year Treasury yields have decreased in nine out of the last eleven days amid concerns over economic weakness. These worries intensified following weak consumer and business sentiment reports, along with a rise in jobless claims and a sharp fall in the Atlanta Fed GDPNow tracker.

Currently, 10-year yields stand at 4.23%, down from a high of 4.66% on February 12 and 4.80% in mid-January. This level is below the Federal Reserve’s target range of 4.25-4.50%, with 3-month T-bill rates at 4.30%, indicating an inverted yield curve, which often signals an impending recession.

Historically, such inversions have preceded recessions, yet the previous inversion from 2022 to late last year did not lead to a recession immediately. The economic indicators continue to evolve, leaving observers awaiting further developments.

The recent decline in 10-year Treasury yields reflects growing pessimism about economic strength. Investors have reacted to weaker data, forcing yields lower as they recalibrate expectations for future growth. The drop from 4.66% just weeks ago to 4.23% today marks a considerable change in sentiment. With short-term rates now exceeding longer-term ones, the market is sending a warning signal—one that has historically predicted downturns.

Jerome and his colleagues at the Federal Reserve remain aware of this. The yield curve’s behaviour suggests that financial markets anticipate slower expansion, potentially leading to policy adjustments. However, the disconnect between traditional recession indicators and actual economic performance has made forecasting more difficult. The yield curve inversion that began in 2022 did not immediately lead to broad contraction, adding complexity to the current situation.

Labour market softness is now entering the discussion more prominently. Rising jobless claims, if sustained, typically indicate stress in hiring trends. Consumers have also begun to pull back. The weaker sentiment data highlights concern about future conditions, reinforcing the bond market’s message.

The Atlanta Fed’s GDPNow model—often watched for real-time growth estimates—has lowered its projections. A sharp downgrade in anticipated output suggests that prior resilience in economic data may be fading. If momentum is indeed decelerating, it increases the likelihood that policy expectations will shift in the coming weeks.

Money markets have already priced in adjustments, but Jerome’s team has remained measured in their statements. Inflation, though lower than last year, still sits above their preferred range. Future rate moves will depend on how incoming data aligns with their objectives. Any indication of sustained weakness could strengthen the argument for policy easing sooner than previously projected.

Market participants have taken note. A steady decline in Treasury yields reflects positioning for a slower economy, potentially altering strategies across multiple asset classes. If trends in recent data persist, the probability of monetary intervention may rise, reinforcing the directional move in rates observed over the past several weeks.

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EUR/USD exhibited slight fluctuations after a week of volatility, rebounding from losses. The pair fell over 0.70% to a two-week low after facing a third rejection at the 100-day Simple Moving Average (SMA), finding stability just below the 20-day SMA around 1.0420.

Despite a slight recovery at the week’s end, the pair remains at risk after unsuccessful attempts to maintain levels above the 100-day SMA. The confluence of the 20-day and 100-day SMAs raises concerns of a bearish crossover.

Technical indicators show mixed signals, with the Relative Strength Index (RSI) flat in negative territory and the Moving Average Convergence Divergence (MACD) histogram reflecting ongoing selling pressure.

Resistance is currently at the 20-day SMA, while potential support lies at 1.0380 and 1.0350, a key threshold that may influence future price action.

These movements highlight the difficulty in sustaining upward momentum, particularly given repeated failures at the 100-day SMA. This area has now reinforced itself as a barrier that traders will be closely monitoring in the days ahead. In contrast, the 20-day SMA has not provided strong support, which hints at sellers remaining in control. Recent price action suggests that any attempts to move higher could struggle unless we see a decisive break above resistance.

The possibility of a bearish crossover, as suggested by the alignment of the 20-day and 100-day SMAs, adds further downside risk. A break below the aforementioned support levels of 1.0380 and 1.0350 could open the door for further declines, particularly if broader market sentiment shifts against the pair. These support zones should be watched carefully, as a breach may accelerate selling momentum.

Momentum indicators are not offering much reassurance either. The RSI remaining weak suggests a lack of buying pressure, while the MACD histogram points to ongoing selling. Until these indicators show signs of improvement, traders may remain cautious about bullish positions.

For those dealing in derivatives, particularly short-term options and futures, the current setup presents both opportunities and risks. Shorting rallies near resistance levels has been a successful strategy recently, though it requires close attention to shifting market dynamics. If the pair does move lower, watching for reactions at the next support levels will be key in determining whether there is potential for a reversal or a continuation downward.

Heading forward, price action around current resistance and support thresholds may define short-term direction. If sellers remain dominant and the pair struggles to reclaim the 100-day SMA, the downside scenario could stay intact. However, any sudden change in momentum indicators or a breakout above these resistance points might indicate a change in sentiment that requires adjustment to positioning.

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The NASDAQ experienced a drop outside its established range from November, though it approached the 200-day moving average, where a temporary slowdown in the decline occurred. A bounce followed, pushing the price above key levels, including the 38.2% retracement at 18,487.09 and the swing low from November 15 at 18,595, which are now considered support.

For the upward movement to gain traction, surpassing the low of the Red Box at $18,831 is necessary to bolster buyer confidence and advance the correction. Failure to maintain above current support levels may lead to negative technical implications.

The recent downturn in the NASDAQ took it beyond the lower boundary that had held since November, yet the decline lost momentum near the 200-day moving average. This area has historically encouraged buying activity, and once again, demand emerged. The rebound that followed lifted prices back above reference points that traders had been monitoring for potential support, particularly the 38.2% retracement at 18,487.09 and the November 15 swing low at 18,595. These levels, having previously acted as resistance, now take on a different role. If buyers hold their ground here, the path higher remains open.

Stability above these levels is only part of the equation. For sentiment to shift decisively, the market needs to clear the lowest point of the Red Box at 18,831. A move through this area would indicate that buyers are willing to extend the recovery further. Without such a push, uncertainty lingers, and the recent gains may not hold. If sellers regain control and push prices back down, especially below the levels that have just been reclaimed, the structure weakens. A failure to maintain support would reinforce the dominance of those positioned for further downside, potentially accelerating selling pressure.

Market participants should focus not only on price movements but also on how the market reacts at these levels. A measured approach is necessary. Rash decisions based on short-term fluctuations can be costly, particularly when broader trends still lack clarity. The next few sessions will provide insight into whether this recovery is a pause in a larger decline or the start of something more sustainable. Buyer participation near support levels matters; if interest fades, expectations should adjust accordingly.

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The Pound Sterling is currently struggling to surpass the 1.2600 mark against the US Dollar, trading at 1.2607. It is anticipated to achieve its first monthly gain since September 2024.

In the North American session, GBP remains stable near 1.2600, as the US Dollar retracts gains due to forecasts of a slowdown in the core Personal Consumption Expenditure (PCE) index. The USD Index maintains a value around 107.40.

The GBP/USD pair dipped to approximately 1.2580 earlier, influenced by tariff uncertainties from the US administration. Upcoming US PCE data is expected to be a key focus later today.

James has highlighted the struggle of Sterling to break past 1.2600, but signs suggest it could post its first monthly advance since last September. While it holds steady in the North American session, some support comes from the US Dollar pulling back. That retreat seems linked to forecasts of a slowdown in the core PCE index. Meanwhile, the broader Dollar gauge remains elevated around 107.40.

Earlier in the session, the Pound fell to roughly 1.2580. This drop happened as traders reacted to uncertainty around potential tariffs from Washington. However, eyes are now firmly set on the upcoming core PCE index report.

Daniel draws attention to that data release, and for good reason—it’s the Federal Reserve’s preferred inflation gauge. If figures come in lower than expected, markets may interpret it as a sign that rate pressures could ease, which might weaken the Dollar further. That, in turn, could provide more fuel for Sterling to push back towards recent highs. Conversely, if the data surprises to the upside, the arguments for keeping US interest rates higher for longer would gain credibility, likely putting renewed pressure on the Pound.

Beyond today’s numbers, we should watch for any indication of a shift in the Bank of England’s stance. Emma has already pointed out that Sterling’s outlook depends not just on the Fed, but also on expectations around the BoE’s rate trajectory. Any signals that policymakers in London are growing more cautious about inflation cooling too quickly could add strength to Sterling.

Meanwhile, traders should remain alert to ongoing discussions around tariffs. Whether or not Washington moves forward with new trade measures will be key, as uncertainty in that domain could continue to inject volatility into markets. Short-term movements in the pair are likely to reflect the tension between US rate expectations and any new trade policy shifts.

For now, the focus remains on the coming PCE inflation data. If traders see confirmation of softer price pressures, we could find Sterling attempting further upside moves. However, if that data suggests inflation is still sticky, expect buying pressure on the Dollar to pick up pace again.

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