The US dollar index fluctuated sideways, still hovering at a five-month low, and finally closed up 0.184% at 103.58. As of now, the US dollar is quoted at 103.59.
The US CPI data for February was lower than expected across the board, and the swap market's bets on the Fed's interest rate cuts this year have not increased but decreased, from 73 basis points to about 67 basis points.
The US budget deficit for this fiscal year has reached 1.1 trillion US dollars, a record high for the same period.
White House economic adviser Hassett: US GDP growth in the first quarter is expected to be between 2% and 2.5%.
OPEC maintains its forecast for global crude oil demand growth this year and next year. In February, OPEC+ crude oil production averaged 41.01 million barrels per day, up 363,000 barrels per day from the previous month.
US EIA crude oil inventories recorded an increase of 1.448 million barrels in the week ending March 7, lower than the expected 2.001 million barrels.
US oil industry executives will meet with Trump next week to discuss tariffs, trade and liquefied natural gas exports.
The UAE handed over Trump's letter to the Iranian Foreign Minister.
Mexico's Economy Minister will announce news about tariffs on Thursday local time;
US Commerce Secretary: Even if the tariff policy triggers a recession, it is worth it;
The EU announced that it would impose retaliatory tariffs on US products worth 26 billion euros from next month;
Canada will impose a 25% retaliatory tariff on US goods worth 29.8 billion Canadian dollars;
Trump: Will respond to the EU's retaliatory tariffs.
The US inflation rate fell in February, but Nomura Securities economists believe that the Fed will not cut interest rates this year. The CPI sub-item with a higher weight in core PCE inflation performed better than Nomura expected, causing Nomura to raise its forecast for core PCE inflation in February from the previously expected 0.28% to 0.32%. "The strong performance of the PCE-related part of the CPI supports our forecast that the Fed will not cut interest rates this year," they said in the report. Unless there is an unexpected surprise in the PPI data, core PCE inflation may cause the Fed to become more cautious about resuming interest rate cuts. Nomura added that while it is too early to see the impact of tariff increases on consumer prices, potential inflationary pressures and policy-driven upside risks may support the Fed's hawkish approach.
The US JOLTs job vacancy data for January released overnight continued the basic characteristics of the US labor market in the past year, namely low layoffs, low turnover and low hiring rates. Although the job market performed better in the fourth quarter of 2024, low hiring rates are still the main reason for the relatively weak performance of the labor market in recent years. We expect that the overall weakness of the labor market will be exacerbated by seasonal adjustments (weak demand during the regular hiring season), rising uncertainty in economic growth and weaker market sentiment this spring. It is worth noting that the number of layoffs in government departments has continued to decline, driving the overall layoff rate down. However, the DOGE department led by Musk has accelerated the wave of layoffs in government departments since mid-February. This situation is expected to be reflected in the JOLTs job vacancies in February. Although it is expected to increase the layoff rate by only about 0.1%, the data will more accurately reflect the scale of federal layoffs (the non-agricultural report only shows the net change in the employed population). Larger-scale layoffs of federal and private contractors that rely on government funds may appear in the summer, and the initial impact is expected to be reflected in the number of initial unemployment claims and monthly employment reports.
Bank of America analyzed market speculation about the so-called "Mar-a-Lago Agreement". This is an unconfirmed, Trump-led dollar devaluation plan aimed at enhancing the competitiveness of the US manufacturing industry. The content will include replacing short-term US bonds with long-term debt to prevent further escalation of the tariff war. If it is really implemented, its impact on the foreign exchange market and the market will be huge.
As part of a coordinated devaluation effort, the dollar will weaken significantly. The U.S. Treasury yield curve will be flatter as short-term Treasury bonds are exchanged for long-term bonds. Rising import costs will lead to greater inflation risks. Lower export prices will support domestic manufacturing in the United States.
U.S. trading partners are unlikely to agree to such an agreement. Any aggressive unilateral action could disrupt global markets and lead to increased volatility.
Conclusion: The "Mar-a-Lago Agreement" is unlikely to become formal policy, but if it is implemented, forced dollar devaluation may trigger inflationary pressures, a flatter U.S. Treasury yield curve and exchange rate volatility, and may be resisted by global partners. For now, this remains a theoretical risk rather than a policy reality.
USD/JPY fell rapidly after the release of the weaker-than-expected February CPI, but quickly rebounded to around 149 as the stock market rebounded and boosted risk sentiment. However, considering the weak economic data released by the United States recently, the dollar recorded its worst weekly performance since November 2022 last week. The outlook for the United States and Japan remains mildly bearish. If the February PPI released on Thursday and the University of Michigan Consumer Confidence Index released on Friday continue to strengthen the prospect of slowing US economic growth, the downward pressure on the United States and Japan may continue to intensify. On the other hand, Ukraine's acceptance of the "one-month ceasefire agreement" proposal mediated by the United States has injected optimism into the market, but the trade tensions caused by the Trump administration's comprehensive 25% tariff on steel and aluminum products from Canada, Mexico and China are still fermenting-the European Union announced the implementation of 26 billion euros of countermeasures from April 1, and Canada also temporarily compromised after the United States withdrew its threat of 50% steel and aluminum tariffs.
From a technical perspective, the USD/JPY is testing the key support-turned-resistance zone of 149-150, but a failure to break through may trigger a new round of selling pressure. The first downside target is 148. After losing, it may test the support of the intraday low of 146.50 or even the important psychological level of 145. However, if a breakthrough is achieved, it is expected to challenge the 200-day moving average of 152.