Forexlive Americas FX news wrap: Stocks take a nosedive, inflation expectations jump ...Middle East

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Forexlive Americas FX news wrap: Stocks take a nosedive, inflation expectations jump
UMich final February consumer sentiment 64.7 versus 67.8 expectedUS long-term inflation expectations hit a 30-year high in the UMich surveyCanada December retail sales +2.5% vs +1.6% expectedUS existing home sales for January. 4.08 million versus 4.12 million estimateFed's Goolsbee: Steel tariffs will raise production costs in regionBaker Hughes oil rig count rises -7 in the current weekBOC Macklem. Monetary policy must ensure higher prices do not become ongoing inflationTrump will sign memorandum today to counter digital taxes hated by big tech - reportEyes on Ukraine as intense talks continue. Russia could help fund reconstruction

Markets:

S&P 500 down 1.7%, Russell 2000 down 2.9%Worst day for stocks since Dec 18WTI crude oil down $2.26 to $70.22US 10-year yields down 7 bps to 4.35%Gold down $3 to $2936JPY leads, AUD lags

The market cracked today as a wall of worries hit. The flash point was a jump in 5-year inflation expectations in the UMich survey to a 30-year highs. That raised some questions about US rate cuts this year but it was about more than that as concern about US tax cuts, tariffs and a handful of other things. There is more on that here.

    Another thing that some cited was a series of reports about a covid-like illness in China. I don't think we're going to be locking down any time soon but it's something to keep an eye on.

    The FX market wasn't as volatile as stocks but it was the same directionally on a flight to safety that benefited the yen and weighed most-heavily on commodity currencies. The move was steady and unwound some of the recent US dollar weakness while extending the recent run of yen strength.

    That saw EUR/JPY fall toward the lows of the month and has USD/JPY threatening the low from early December. CAD/JPY also touched the lowest since September.

    Have a great weekend.

    This article was written by Adam Button at www.forexlive.com.

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