CFTC Commitments: ICE U.S. Dollar Index Futures/Options - Apr 18

Dow Jones Newswires

Australia 200 Index

-0.84%

USD INDEX - ICE FUTURES U.S. 
OPTION AND FUTURES COMBINED POSITIONS AS OF 04/15/25          | 
--------------------------------------------------------------| NONREPORTABLE 
      NON-COMMERCIAL      |   COMMERCIAL    |      TOTAL      |   POSITIONS 
--------------------------|-----------------|-----------------|----------------- 
  Long  | Short  |Spreads |  Long  | Short  |  Long  | Short  |  Long  | Short 
-------------------------------------------------------------------------------- 
(U.S. DOLLAR INDEX X $1000)                          OPEN INTEREST:       27,336 
COMMITMENTS 
  15,723   13,941    1,370    7,426    8,743   24,519   24,054    2,818    3,282 
 
CHANGES FROM 04/08/25 (CHANGE IN OPEN INTEREST:      4,487) 
     236    1,338      126    3,793    2,557    4,155    4,022      332      465 
 
PERCENT OF OPEN INTEREST FOR EACH CATEGORY OF TRADER 
    57.5     51.0      5.0     27.2     32.0     89.7     88.0     10.3     12.0 
 
NUMBER OF TRADERS IN EACH CATEGORY (TOTAL TRADERS:       91) 
      37       44        8        3        9       44       57 
 
 
CANOLA - ICE FUTURES U.S. 
OPTION AND FUTURES COMBINED POSITIONS AS OF 04/15/25          | 
--------------------------------------------------------------| NONREPORTABLE 
      NON-COMMERCIAL      |   COMMERCIAL    |      TOTAL      |   POSITIONS 
--------------------------|-----------------|-----------------|----------------- 
  Long  | Short  |Spreads |  Long  | Short  |  Long  | Short  |  Long  | Short 
-------------------------------------------------------------------------------- 
(20 Metric Tonnes)                                   OPEN INTEREST:      206,352 
COMMITMENTS 
  69,033   47,339   23,529  112,046  133,520  204,609  204,389    1,744    1,963 
 
CHANGES FROM 04/08/25 (CHANGE IN OPEN INTEREST:    -22,271) 
  25,251  -29,002   -3,984  -42,871   10,790  -21,604  -22,196     -667      -75 
 
PERCENT OF OPEN INTEREST FOR EACH CATEGORY OF TRADER 
    33.5     22.9     11.4     54.3     64.7     99.2     99.0      0.8      1.0 
 
NUMBER OF TRADERS IN EACH CATEGORY (TOTAL TRADERS:      292) 
     115       83       67       67       68      219      186 
 
     Write to Valena Henderson at csstat@dowjones.com

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Major Canadian Economic Indicators Expected Next Week

Dow Jones Newswires

All dates are in ET Time. 
 
Monday, April 21, 2025                                       Exp        Prev 
 ET/GMT 
  N/A               Canada: Easter Monday 
 
Tuesday, April 22, 2025                                      Exp        Prev 
 ET/GMT 
0830/1230  Mar      Industrial product and raw materials price indexes 
                       Indus Prices, M/M%                               +0.4% 
                       Raw Material Prices, M/M%                        +0.3% 
 
Wednesday, April 23, 2025                                    Exp        Prev 
 ET/GMT 
0830/1230  Mar      New Housing Price Index 
                       New House Prices, M/M% 
                       New House Prices, Y/Y% 
  N/A               ABAC APEC Business Advisory Council Meeting 
 
Thursday, April 24, 2025                                     Exp        Prev 
 ET/GMT 
0830/1230  Feb      Payroll employment, earnings and hours, and job vacancies 
 
Friday, April 25, 2025                                       Exp        Prev 
 ET/GMT 
0830/1230  Feb      Retail trade 
                       Total Retail Sales, M/M%                         -0.6% 
                       Retail Sales Ex-Autos, M/M%                      +0.2%

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Not even the co-creator of this economic-uncertainty index can tell when the worst will be over

MarketWatch

By Vivien Lou Chen

Expect uncertainty over U.S. economic policy to remain high as long as policy gyrations continue, says economist Steven Davis

It had become something of a cliché to say that investors hate uncertainty - at least until the confusion surrounding President Donald Trump's on-again, off-again tariff plans left them grasping for a way to quantify the unpredictably that has contributed to violent moves in stocks, bonds and other assets in 2025.

Market participants are trying to determine whether tariff-driven uncertainty is at or near a peak, which has major implications for investors and traders looking to get ahead of the next major round of volatility. If the U.S. has reached or is close to this peak of uncertainty, that could mean recent selloffs in stocks, and perhaps bonds, have gone as far as they can go. By contrast, if the peak is still a ways off, there might still be room for future selloffs to run.

Strategists and economists at a number of financial firms have latched on to the Economic Policy Uncertainty Index, which was introduced in the early 2010s and is having a moment in the sun.

The Economic Policy Uncertainty Index rose past 600 as of last Saturday, the most recent day for which weekly data can be compiled - surpassing the level of just above 500 reached in March 2020 at the start of the COVID-19 pandemic. The latest weekly average of daily values is shown below, illustrating how rising trade tensions are pushing uncertainty about U.S. economic policy practically off the chart.

The Economic Policy Uncertainty Index 'is one of our preferred measures of uncertainty.'Adam Schickling, senior economist at Vanguard

"We won't know whether we've hit peak uncertainty, because it very much depends on what happens to policy," said Steven Davis, director of research at Stanford University's Hoover Institution and one of the co-creators of the index. "If we continue with on-again, off-again policies, then uncertainty will remain quite high and will continue to be in place as long as there are policy gyrations."

There are three main takeaways from this reading, according to Davis. One is that higher uncertainty means consumers will pull back on spending, particularly on durable goods and discretionary items. The second is that "businesses will cut or defer investments because they can't make sensible decisions about where to invest, what products to produce and so on." And the third is that there will be less demand for labor and fewer job opportunities.

Stocks, bonds and other assets have seen wild swings since Trump's April 2 unveiling of his tariff plans. The S&P 500 SPX slumped by more than 12% in the following four sessions for its worst four-day performance since the early days of the pandemic five years ago, before rallying 9.5% on April 9 for its biggest one-day gain since October 2008.

Stocks remain well below their April 2 levels, with the S&P 500, Dow Jones Industrial Average DJIA and Nasdaq Composite COMP posting losses in a holiday-shortened week ahead of Good Friday that was marked by Federal Reserve Chair Jerome Powell's stark assessment of how tariffs may lead to rising inflation and slowing growth.

Investors began 2025 with hopes that the U.S. economy would remain in good shape under a second Trump administration, which was expected to produce deregulation, tax cuts and other market-friendly measures. Instead, worries about U.S.-imposed tariffs and retaliatory moves by other countries have fanned recession fears.

In March, the S&P 500 SPX and Nasdaq Composite COMP both ended the first three months of the year with their worst quarterly performances since 2022. Meanwhile, U.S. government debt mostly rallied during the first quarter, reflecting the traditional flight-to-safety moves seen during periods of fear or uncertainty.

Many people assumed that Trump's April 2 announcement of what he referred to as reciprocal tariffs on goods from other countries would mark the peak of uncertainty and provide clarity about the path ahead. That didn't happen. Instead, the tariffs announced on what Trump called "liberation day" were larger than expected and worse than the worst-case scenario penciled in by most analysts.

Uncertainty has only continued to climb despite Trump's April 9 decision to implement a 90-day pause on tariffs for most countries, except China.

What's different about the current spike in uncertainty compared with past periods, such as the start of the global financial crisis in 2008 and the 2020 pandemic, is that it has been "entirely engineered by ill-advised policy decisions," Davis said. "It's not like some other forces caused this. There's astonishment at how much havoc can be wreaked by one president, who may not be listening to his advisers or may not be getting very good advice."

For their part, Trump and administration officials say the long-term benefits of reordering of the global trading system are worth the near-term pain.

Alarm from investors

Financial-market participants typically react to a big jump in uncertainty with a flight-to-safety response that leads investors to clamor for U.S. assets, which pushes up Treasury bond prices and the dollar, Davis said via phone.

Investors were alarmed when the opposite happened last week: The 10-year Treasury note BX:TMUBMUSD10Y and 30-year bond BX:TMUBMUSD30Y aggressively sold off, which produced the largest weekly increase in yields seen in decades. And the dollar fell sharply versus major rivals, with the ICE U.S. Dollar Index DXY touching a three-year low last Friday.

"The way I read it is that many investors are having doubts about the reliability of the U.S. as a trading partner and the U.S.'s ability to deliver sensible policy-making decisions," Davis said. "We're still not out of the woods, and the likelihood of a recession has gone up a lot since [Trump's] inauguration."

Davis - along with Scott Ross Baker, an associate finance professor at Northwestern University's Kellogg School of Management, and Nick Bloom, a Stanford economics professor - created the Economic Policy Uncertainty Index in response to the policy uncertainty that arose from the aftermath of the 2008-09 financial crisis. Colloquially referred to as Baker, Bloom and Davis, the trio had their first moment in the spotlight more than a decade ago under the administration of President Barack Obama, when their index was used to analyze the economic impact of the Affordable Care Act of 2010.

Part of what makes their index unique is the way it is put together.

When developing the index, Baker, Bloom and Davis relied on dozens of people to read thousands of randomly selected newspaper articles. The trio then created computer instructions based on the way a human being would normally read a story, which helped them to optimize computer calculations.

The daily measure of the Economic Policy Uncertainty Index draws on a news database that follows more than 1,000 U.S. newspapers. The index is based on the number of articles that contain at least one term from each of the following three sets: "economic" or "economy"; "uncertain" or "uncertainty"; and "legislation," "deficit," "regulation," "congress" "federal reserve" or "white house."

Studies have found that U.S. economic-policy uncertainty tends to lead to delays in investments, hiring and capital spending - all of which can add up to greater financial-market volatility. Uncertainty in general has been described by Mark Carney, the former Bank of England governor who is now Canada's prime minister, as a "form of economic post-traumatic stress disorder."

This may be why so many people are turning to the Baker, Bloom and Davis index. Those people include strategists Blake Gwinn of RBC Capital Markets and Adam Turnquist of LPL Financial, as well as economists like Lindsey Piegza and Lauren Henderson of Stifel, Nicolaus & Co. and Adam Schickling of investment giant Vanguard.

"We know that uncertainty affects the economy, everything from how businesses invest for the future to the everyday purchasing decisions of consumers. How to measure uncertainty is less obvious. It's not directly measurable like interest rates, inflation or unemployment," Schickling wrote in an email to MarketWatch.

The Economic Policy Uncertainty Index "is one of our preferred measures of uncertainty," Schickling said, referring to the monthly version of the index that also includes tax-policy changes and dispersions in professional economic forecasts. "We incorporate this uncertainty measure in several of our economic models to understand how elevated levels of uncertainty affect business investment, consumer discretionary spending and job growth, just to name a few."

The index can be a valuable forecasting tool, but "it's important to remember the utter complexity of a large economy like the United States that can be more sensitive or less sensitive to increases in policy uncertainty depending on the broader economic environment," he added.

Gwinn, RBC Capital's head of U.S. rates strategy, said the index "gives some weight and visual appeal to something we all know to be anecdotally true anyway: Uncertainly has been rapidly rising."

He and another strategist, Izaac Brook, concluded in a note released last week that heightened tariffs and broader uncertainty have "closed the path to our prior, more optimistic, base case."

And at LPL Financial, Turnquist, the chief technical strategist, said the index is "one of the things that we are watching because for the stock market - in our view, at least - to have a sustainable bottom, policy uncertainty needs to peak. We do think we are at or near or past the stage of peak policy uncertainty, but there are not many ways to measure this on a quantitative basis."

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Japan Core Inflation Strikes 2.9% on Year in March

MT Newswires

Challenging the nation's central bankers, Japan's widely quoted core consumer price index (CPI), which excludes fresh food, rose 3.2% from a year ago in March, accelerating from a 3% on-year rise in February, the Statistics Bureau reported Friday.

The Bank of Japan has a 2% annual inflation target on the CPI-core, but inflation has consistently, if moderately, posted above the goal since early 2023.

Japan's consumers in March were hit by soaring prices for the staple rice, up 92.1% on year, following weak crop harvests.

Japan's headline CPI, which includes all items, rose 3.6% on year in March, cooling marginally from the 3.7% on-year gain in February.

The nation's CPI "core-core," which excludes fresh food and certain energy charges, rose 2.9% in March on year after a 2.6% on-year rise in February, reported the Statistics Bureau.

There were some positive notes in the inflation report; the price of services rose a mild 1.4% in March on year, while residential rents gained only 0.4% on year.

To battle inflation, the Bank of Japan has lifted its key interest rate, in stages, from a negative 0.1% in January 2024 to 0.50% in January 2025, and also slowed down its program of buying Japanese government bonds.

In its mid-March meeting, the central bankers paused on rate hikes, citing economic uncertainty, in part associated with the Trump Administration's tariffs.

The Bank of Japan has reiterated its support of keeping demand strong enough that real wages increase, leading to stronger consumer spending and more domestic economic growth.

At its March policy session, the Bank of Japan affirmed its January outlook, that "underlying CPI inflation is likely to be at a level that is generally consistent with the price stability target" by the second half of fiscal 2025, which started on April 1.

The next Bank of Japan monetary policy session and decision is slated for the end of April.

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