The AUD/USD pair fell by approximately 0.54%, nearing 0.6200 and marking a three-week low after a six-day decline. Contributing factors included a proposal for an additional 10% tariff on Chinese imports by President Trump and disappointing Australian Private Capital Expenditure data, which shrank by 0.2% in Q4 2024 against a forecast of 0.8%.

The US Personal Consumption Expenditures (PCE) data rose by 0.3% month-on-month in January, in line with expectations. The Australian dollar is affected by various factors, including interest rates set by the Reserve Bank of Australia, the state of the Chinese economy, and the price of Iron Ore.

Moreover, the trade balance influences the AUD’s value, with a positive balance generally strengthening the currency. Immediate support for the AUD/USD may be around the 0.6150 level, while resistance is likely near the 20-day Simple Moving Average if market sentiment improves.

This latest move in the AUD/USD pair reflects the weight of both domestic and global pressures on the Australian dollar. A slide of 0.54% might not seem extreme in isolation, but a six-day losing streak leading to a three-week low suggests a shift in sentiment. It isn’t just the broader market mood—specific economic indicators are pointing to the same direction.

Adding friction to the Australian dollar’s performance was Trump’s proposal for an additional 10% tariff on Chinese imports. Markets tend to react quickly to such announcements, as any potential economic burden on China may have a knock-on effect on Australia. With a deep trade relationship between the two countries, anything that slows Chinese demand can ripple through to Australia’s exports, particularly commodities like iron ore.

The latest data on Australian Private Capital Expenditure didn’t help either. A 0.2% contraction in Q4 2024, when economists had expected a 0.8% rise, doesn’t exactly inspire confidence. Weakness in capital expenditure often signals hesitancy among businesses to invest, which can be a reflection of broader uncertainties in the economy. If firms aren’t comfortable expanding, job markets and consumer spending could eventually feel the strain.

Meanwhile, across the Pacific, the US Personal Consumption Expenditures (PCE) data for January was exactly as expected, rising by 0.3% month-over-month. Given that PCE is the Federal Reserve’s preferred inflation gauge, a solid reading without surprises tends to keep rate expectations stable. It maintains the status quo rather than forcing traders to reposition heavily.

Interest rates set by the Reserve Bank of Australia remain among the defining factors for the Australian dollar’s strength. When rates are relatively high compared to other major economies, demand for the currency tends to pick up, as investors seek better returns. But if expectations shift toward cuts, downward pressure can build. The Chinese economy plays an equally critical role, given how much Australian exports rely on continued demand there. The third factor, iron ore prices, ties directly into that dynamic. If China slows, so might its appetite for raw materials, and that has a direct impact on Australia’s trade revenues.

Speaking of trade, Australia’s trade balance remains one of the key measures of support for the currency. A surplus typically reflects strong demand for Australian goods and services abroad, which can lend strength to the dollar. If exports falter or imports surge, that balance weakens, potentially leading to a softer currency.

At the moment, technical indicators suggest that support around the 0.6150 level could be an area of interest. If selling momentum persists, prices might gravitate toward that zone before finding more stability. On the upside, should risk appetite improve and fundamentals turn in Australia’s favour, resistance could emerge near the 20-day Simple Moving Average. From a short-term trading perspective, those are the levels worth watching, as they may determine the next round of price action in this pairing.

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Japan’s final Manufacturing PMI for February stands at 49.0, an increase from 47.7, yet still below the neutral mark of 50. This indicates that the manufacturing sector remains in contraction despite the slight improvement.

Challenges persist primarily due to weak global demand and uncertainties in trade policy. Although the pace of contraction in the factory sector has slowed, there are ongoing struggles with sluggish demand domestically and internationally.

Production has fallen for six consecutive months, with a continuing decline in new orders since mid-2023. While manufacturers express a cautious positive outlook for the coming year, confidence has weakened significantly, reaching its lowest level since June 2020.

Employment levels remain unchanged, as full-time hiring is counteracted by retirements and departures. Rising input costs, attributed to increased expenses for raw materials, labour, and utilities, lead manufacturers to raise selling prices at a faster rate.

We see Japan’s manufacturing sector showing some resilience, but the core challenges are far from over. While February’s final Manufacturing PMI reading at 49.0 is an improvement from the prior month’s 47.7, it remains below the key threshold of 50. This confirms that factories continue to shrink, albeit at a slower rate.

The pressure on production is not easing. A six-month streak of declining output reflects weaker demand from both domestic and international buyers. The drop in new orders, persisting since mid-2023, suggests that purchasing activity is still weak, and businesses are hesitant to commit to fresh acquisitions. Although firms maintain a degree of optimism for the next twelve months, sentiment has taken a hit. Confidence now sits at its lowest point in nearly four years, a reminder of the uncertainty within the sector.

Hiring trends tell a similar story. Employment levels are holding steady, but not due to an uptick in recruitment. Instead, any job additions are balanced out by retirements and voluntary exits. Without fresh demand driving higher production needs, businesses appear cautious about onboarding new workers. Rising input costs add another layer of complexity. More expensive raw materials, higher labour expenses, and increased utility charges mean that factories are passing the burden onto consumers by lifting selling prices at a quicker pace.

For traders, these conditions point to heightened volatility in this space. Pricing dynamics, cost pressures, and order flows will remain key factors to watch. Inflationary concerns could prompt shifts in monetary policy expectations, influencing market reactions. The persistence of weak global trade will continue weighing on sentiment, and any policy developments that impact supply chains or export competitiveness could drive further movement.

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CFTC data shows that Australia’s net positions in AUD NC rose from $-56.7K to $-45.6K. This change indicates a shift in the sentiment regarding the Australian dollar.

The AUD/USD pair is recovering towards 0.6250, supported by positive data from China’s Caixin Manufacturing PMI for February. Broader movements in the market, including optimism from peace talks and a rise in cryptocurrency values, contribute to the Australian dollar’s strength.

Meanwhile, USD/JPY fell toward 150.00 due to overall weakness in the US dollar. Expectations for interest rate hikes from the Bank of Japan bolster the yen’s value.

Additionally, gold has rebounded towards $2,900, primarily driven by uncertainty surrounding the Russia-Ukraine conflict and a weaker US dollar. Upcoming data releases, including the US February ISM Manufacturing PMI, may provide further market direction.

In the week ahead, the focus will be on NFP data and the ECB’s monetary policy decision, alongside a Canada jobs report and minutes from the RBA. Concerns surrounding tariffs are re-emerging, with plans for new tariffs on Canada and Mexico anticipated to be enacted soon.

The recent shift in Australia’s net positions, moving from -56.7K to -45.6K, reflects an adjustment in market sentiment around the Australian dollar. This suggests that traders are not as bearish on the currency as they were previously. A reduction in net short positions often signals a willingness to engage in more risk-taking or an expectation that the currency will strengthen relative to its peers.

AUD/USD recovering toward 0.6250 is not happening in isolation. The latest Caixin Manufacturing PMI data out of China played a role in boosting confidence, offering signs that demand remains steady in one of Australia’s key trading partners. On top of that, sentiment in global markets has shifted as peace talks provide some relief, and cryptocurrency prices push higher. When risk appetite improves, higher-beta currencies like the Australian dollar tend to benefit.

The US dollar weakening had an effect elsewhere as well, particularly in the USD/JPY pair, with the yen climbing back toward 150.00. Expectations that Japan’s central bank may go ahead with an interest rate hike are adding to the yen’s appeal. If the Bank of Japan does follow through, borrowing costs could rise, a stark contrast to the US, where markets anticipate rate cuts later in the year. Traders should be aware that such expectations, if met, could lead to continued pressure on USD/JPY.

Gold prices have also been climbing, making their way toward $2,900. The ongoing Russia-Ukraine situation fuels uncertainty, and with the US dollar wavering, investors are turning to safe-haven assets. The next moves in gold may depend on upcoming macroeconomic releases, with particular attention on US ISM Manufacturing PMI data for February. If the data signals a slowing economy, expectations for rate cuts may strengthen, which could extend the gold rally.

Looking ahead, the focus will be on employment data, central bank decisions, and trade policies. The release of non-farm payrolls in the US will provide more clarity on the labour market’s health, potentially influencing Fed expectations. Meanwhile, the European Central Bank’s stance on monetary policy could drive euro volatility. Canada’s jobs report and minutes from Australia’s central bank will also be closely watched, offering additional clues on future monetary actions.

Trade tensions are once again entering the conversation, with discussions around new tariffs on Canada and Mexico. If enacted, these could impact various sectors and affect market sentiment. Traders should keep an eye on whether such measures gain traction, as any trade disruptions tend to influence currency flows and risk appetite.

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The People’s Bank of China (PBOC) is anticipated to set the USD/CNY reference rate at 7.2857. The PBOC determines the daily midpoint of the yuan under a managed floating exchange rate system, permitting fluctuations around this central reference rate.

Each morning, the PBOC sets a midpoint for the yuan against various currencies, mainly the US dollar, by assessing market supply and demand, economic indicators, and international currency conditions. This midpoint acts as a trading reference throughout the day.

The yuan can move within a trading band of +/- 2% from the midpoint, which may adjust according to economic conditions. If the yuan nears the band limits or experiences high volatility, the PBOC may intervene to stabilise its value.

Authorities in Beijing have relied on this system to temper excessive price swings while maintaining a degree of market flexibility. By steering the midpoint setting at 7.2857, policymakers are sending a clear message about their current stance. Given recent currency movements, the central bank’s approach suggests a preference for stability rather than abrupt shifts. The way this plays out will influence market thinking and future pricing.

Shifting sentiment in global markets has kept traders attentive to any shifts in guidance from monetary authorities. The reference rate continues to serve as a barometer of policy intent. A setting near market expectations would indicate alignment with natural trading pressures, whereas a stronger-than-expected fix could imply greater intervention efforts behind the scenes. Watching these daily actions can help determine whether authorities feel any need to curb depreciation forces or allow for some adjustment.

Beyond the immediate exchange rate levels, broader macroeconomic trends remain in focus. Economic data from China has painted a mixed picture, with policymakers balancing the need for growth support while avoiding excessive financial risk. A carefully managed currency acts as one lever in this broader strategy. Decisions related to liquidity management, lending conditions, and fiscal support all feed into exchange rate dynamics.

Interest differentials between major economies add another layer of complexity. Policy direction from the US Federal Reserve and other central banks remains an active consideration. As funding costs abroad shift, differences in bond yields influence capital flows, affecting demand for the yuan. These global factors add pressure on Beijing’s decision-making, shaping how much flexibility they allow in daily rate settings.

Market participants will be closely dissecting each morning’s midpoint, alongside policy signals from onshore authorities. If adjustments in liquidity provisions or guidance from policymakers hint at greater tolerance for movement, expectations around currency paths may shift rapidly. The coming weeks will provide further clarity on whether authorities anticipate larger price swings or intend to keep daily fluctuation strictly controlled.

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CFTC data indicate that net positions for oil in the United States decreased to 171.2K from the previous 197.6K.

The AUD/USD pair rose above 0.6200, recovering to around 0.6215, aided by positive Chinese PMI data. Meanwhile, USD/JPY faced resistance near the 151.00 mark due to interest rate expectations from the Bank of Japan and geopolitical concerns. Gold prices increased to approximately $2,870, driven by ongoing global uncertainties.

Upcoming events include the Non-Farm Payroll (NFP) report and the European Central Bank’s monetary policy decision. Market sentiment may be influenced by tariff discussions, particularly regarding measures on Canada and Mexico.

The drop in net positions for oil shows that traders are reducing long bets, which might suggest lowered confidence in future price rises. This could be due to adjustments in expectations based on supply and demand shifts. If this trend continues, it could weigh on prices, but external factors, such as production cuts or geopolitical issues, could quickly change the course. Tracking inventory data will be key to seeing if this shift has momentum or if it’s just a temporary positioning change.

The Australian dollar gaining traction above 0.6200 seems to reflect renewed optimism following better-than-expected Chinese PMI data. Since China is a major trading partner, signals of stronger economic activity spill over into stronger demand expectations. However, staying above that level will depend on whether this economic momentum is sustained. If risk sentiment takes a hit globally, the pair could struggle. The 0.6215 region might act as a short-term test, with additional movement hinging on broader USD trends.

For the yen, pressure near 151.00 suggests the market is still watching the Bank of Japan closely. Traders seem reluctant to push further without clearer signals on rate policy. Rate hike expectations, layered with geopolitical concerns, have kept a cap on strong yen weakness. Any shifts from policymakers or sudden risk aversion could see a sharp move lower for USD/JPY. Patience will be needed in this zone, as reactions may be sudden once clarity emerges.

Gold’s rise towards $2,870 shows how uncertainty is keeping safe-haven demand alive. Whether inflation concerns or geopolitical risks continue to support prices will be something to monitor. If central banks maintain their cautious stance, this momentum could hold. However, rapid shifts in rate expectations could see gold retrace if the dollar strengthens again. Those holding long positions might want to watch for any hints of market overextension.

With the Non-Farm Payroll (NFP) report approaching, volatility can be expected. A stronger-than-expected payroll number could fuel expectations of tighter monetary policy, causing sharp moves. Conversely, weakness in the labour market would shift attention towards potential rate cuts. Given the weight this report carries, short-term adjustments are likely across USD pairs and broader risk assets.

The upcoming European Central Bank meeting adds another element traders need to keep an eye on. If policymakers lean towards a more supportive stance, it could push the euro lower. On the other hand, resistance to further easing could stabilise the currency. Reaction in bond yields will provide insight into how convinced the market is about any policy messaging.

Lastly, trade measures targeting Canada and Mexico could bring added tensions. Any imposition of new tariffs or escalations in trade disputes might create ripple effects through commodities and currency markets. Keeping a close watch on government announcements and negotiations will be necessary, as sudden shifts in trade policy could catch markets off guard.

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Warren Buffett discussed the implications of Trump’s tariffs in a recent CBS interview. He stated that tariffs could lead to inflation and negatively impact consumers.

Buffett described tariffs as a form of warfare and indicated that they effectively act as a tax on goods. He emphasised the need to consider the long-term effects of such policies.

Chinese media have responded to his remarks regarding tariffs being an ‘act of war’. This feedback aligns with the sensitivity surrounding trade relations between the US and China.

Warren’s comments come at a time when markets are already dealing with uncertainty surrounding trade policies. The mention of tariffs as a form of warfare is not just a rhetorical choice—it highlights the financial consequences that come with these policies. If imported goods become more expensive due to added costs, businesses will either pass those expenses to consumers or absorb the hit themselves, which can create instability in different sectors.

Given that we have seen inflationary pressure build up in several economies, caution is necessary. If prices rise too quickly, buying power weakens, which can shift market sentiment in unpredictable ways. Investors may begin pricing in expectations of further inflation, affecting valuations and broader confidence. This is where trader behaviour becomes even more relevant. When uncertainty grows and political risks add to existing concerns, volatility often follows.

Reactions from Chinese media also serve as a reminder that rhetoric has real-world effects. Markets are not just affected by direct policy decisions but also by responses from key players. If Beijing sees Warren’s phrasing as an escalation, it may influence future policy in ways that affect trade flows. Even a shift in tone from one side can push negotiations in a different direction, making it necessary to track updates closely.

As discussions about tariffs remain in focus, those navigating price movements must weigh the potential speed at which new decisions can roll out. We have seen in the past that official statements or policy shifts often trigger immediate reactions before broader trends take hold. Short-term traders should recognise the difference between temporary market swings and longer-lasting changes that shape pricing over weeks or months.

With inflation already being watched closely, any additional cost pressures could push central banks to act sooner than expected. If monetary policymakers see price increases as persistent, they may adjust interest rates accordingly, which would have direct effects on borrowing costs and risk appetites. The link between trade policies and central bank decisions is not always immediate, but it remains an area that cannot be ignored.

For those focused on short-term moves, paying attention to statements from policymakers and corporate leaders will be essential. Market pricing does not wait for confirmed data—it adjusts based on expectations. If sentiment shifts due to policy concerns, this can cause swift adjustments in key sectors, particularly those directly linked to international trade.

Trade remains a factor that affects multiple areas of the economy, and responses from businesses and governments will determine how far-reaching the effects become. With Warren’s warning about the consequences of tariffs now widely discussed, watching both policy decisions and market reactions in the coming weeks will remain a top priority.

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Stocks showed initial gains on Friday following in-line PCE inflation data for January, which indicated core inflation rose by 2.6% year-on-year. This was a welcome sign compared to a revised figure of 2.9% in December, aligning with market expectations.

However, the mood shifted when a meeting between US President Trump and Ukrainian President Zelenskyy ended unsuccessfully. Tensions arose as Zelenskyy demanded security guarantees while Vice President Vance deemed his negotiations disrespectful, contributing to volatility in major stock indices.

Additionally, layoffs announced by Trump advisor Elon Musk and rising tariffs imposed on major trading partners raised concerns within the labour market. Initial Jobless Claims surged to 242,000, surpassing the anticipated 221,000.

Bearish sentiment was prevalent as major US indices remained below their starting points for the year. Nvidia’s stock plummeted 8.5% despite positive earnings, and the Dow Jones traded under its 100-day moving average.

Recent surveys indicated increased pessimism, with 60.6% of retail traders expecting market declines in six months. Meanwhile, 89% of fund managers believe the US stock market is overvalued, marking the highest proportion since April 2001.

The trading session initially looked promising after inflation data matched expectations. Core inflation showed a 2.6% year-on-year rise for January, which came as a relief when compared to December’s revised 2.9%. Many expected something similar, so there were no major surprises, leading to early gains in stocks.

That optimism, however, faded quickly. A meeting between Donald and Volodymyr ended on a sour note. The Ukrainian leader pressed for security guarantees, which did not sit well with Vice President Vance. She called his approach disrespectful—something the market did not take lightly. As tensions rose, so did volatility across major stock indices. The dip seen later in the session reflected the uncertainty surrounding geopolitical affairs.

Adding to the turbulence, Elon announced workforce reductions while new tariffs hit trade partners. That created fresh labour market concerns, which were reflected in a steeper-than-expected rise in initial jobless claims. The latest figures came in at 242,000, well above the anticipated 221,000. With layoffs in focus and protectionist policies tightening, economic worries deepened.

Investor sentiment took a clear hit. The US stock market remains under pressure, with major indices unable to climb back into positive territory for the year. Even Nvidia, which reported strong earnings, felt the weight of selling pressure. The company’s stock dropped 8.5%, defying expectations for a rally. At the same time, the Dow Jones slipped beneath its 100-day moving average, adding to concerns that momentum is fading.

Surveys paint a bleak picture as well. Retail traders have turned more pessimistic, with over 60% expecting further declines in the next six months. Institutional views are even more striking—nearly nine in ten fund managers now think the US stock market is overpriced. That level of concern has not been this high since April 2001, a period that carried its own set of troubles.

For those keeping an eye on derivatives, all of this suggests a complex few weeks ahead. With equity weakness persisting, geopolitical uncertainty on the rise, and labour market fears creeping back in, there is no shortage of factors that could shift price action. Conversations around monetary policy will matter too, though for now, inflation appears to be moving in the right direction.

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In February 2025, the Australian private survey of inflation recorded a month-on-month decrease of 0.2%, compared to the previous increase of 0.1%. Year-on-year, inflation stands at 2.2%, down from 2.3%, remaining below the Reserve Bank of Australia’s target range of 2-3%.

The trimmed mean, a core inflation indicator, also fell by 0.1% month-on-month, marking the first decline since August 2021. Yearly figures for the trimmed mean remain unchanged at 2.3%. The Reserve Bank of Australia is expected to maintain its current position during the upcoming meeting at the end of the month.

This latest inflation data confirms that price pressures in Australia are continuing to ease. A monthly drop of 0.2% follows a slight increase the month before, reinforcing the trend of softening inflation. On a yearly basis, the 2.2% reading remains below the Reserve Bank’s target range, showing no indication that broader inflationary pressures are picking up.

A closer look at the trimmed mean, which strips out volatile price movements, suggests a similar pattern. The 0.1% monthly decline is the first in over three years, highlighting that even core price pressures are weakening. Meanwhile, the annual trimmed mean remains unchanged at 2.3%, which implies that while inflation is slowing, it has yet to retreat further.

With this in mind, the Reserve Bank is unlikely to shift its stance at the upcoming policy meeting. There is little justification for any adjustment when inflation remains within range and underlying price trends are flattening. We must acknowledge that recent data does not present any pressing need for immediate changes.

Looking beyond the central bank’s decision, traders who have been positioned for a sudden adjustment will need to reassess their expectations. This report suggests that current policy settings will stay in place for now, reducing the likelihood of abrupt market reactions.

All of this reinforces the idea that inflationary concerns are becoming less pressing in Australia. If this trend continues over the next few months, markets will need to consider how the Reserve Bank might respond later in the year.

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An oil refinery in Ufa, Russia, experienced a fire following an explosion, according to the state RIA news agency. The emergency ministry stated there is no threat to local residents, although the cause of the fire remains unclear.

Russian Telegram channels, including SHOT, have linked the incident to ongoing drone attacks targeting refineries and pumping stations. Despite the distance from Ukraine, these attacks have been a persistent issue over recent months.

A fire breaking out at an oil refinery is never an isolated event, especially when reports suggest an explosion was involved. The fact that Ufa is far from the immediate frontlines does not make it immune to the kind of disruptions that have repeatedly hit Russia’s energy infrastructure. Officials claim there is no direct risk to the local population, but that does not address the wider impact on fuel production or supply lines.

Telegram channels with close ties to Russian security sources have been quick to draw a connection between this incident and the pattern of drone strikes that have hit oil facilities for months. SHOT, among others, suggests this might not have been an accident. While the exact cause has yet to be confirmed, recent history makes it difficult to dismiss such speculation outright. Patterns like this suggest vulnerabilities that external actors may seek to exploit further.

Looking at the broader picture, Russia’s refining capacity has already come under strain due to repeated attacks. Each strike reduces output, forcing reroutes and adjustments to supply chains, which can then trickle into export markets. When facilities burn, the effect is not limited to physical damage; repairs take time, and disruptions force shifts in strategy. If these incidents continue at this rate or intensify, the market will react accordingly.

Alexander Novak, Russia’s deputy prime minister, downplayed any massive supply interruptions in previous statements on refinery attacks. However, fires like this test those assurances. The authorities may control the immediate messaging, but oil flows tell another story. If capacity remains impaired, refiners will have to compensate by easing domestic obligations or drawing from reserves. This is not a theoretical concern—it has already happened multiple times this year.

These strikes, whether confirmed or not in this particular case, have placed pressure on Russian refining output, particularly as summer demand picks up. Warmer months often bring increased consumption, meaning that any loss in processing capability carries heavier weight. There is also the risk of escalating responses—persistent infrastructure targeting invites defensive measures, and Moscow has hinted at tighter security for key facilities.

In a market already sensitive to supply disruptions, players will be watching for any extended downtime at the Ufa facility. If damage is extensive, flows could be redirected, which would then affect regional availability. Although Russian officials will likely push for a swift return to operations, refinery shutdowns—even partial ones—create temporary bottlenecks.

Those tracking fuel markets should pay attention to whether authorities formally attribute this incident to an attack. If they do, retaliatory steps may follow, increasing uncertainty. If they do not, that leaves room for speculation over whether other sites remain exposed. Either scenario introduces variables that influence sentiment and price expectations.

It is not just about one refinery. The number of recorded disruptions to Russian refining sites recently suggests a pattern that may not stop anytime soon. Each additional strike compounds the overall strain on fuel processing. If reports of further incidents surface, that will provide another cue on where things might be heading next.

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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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