Morning Bid: All Eyes on Trump-Putin Talk, and Then on Central Bank Deluge

Economic

Summary:

Markets focus on a Trump-Putin call amid U.S. ceasefire efforts in Ukraine, while central bank meetings loom. China’s market rally continues, boosted by weak U.S. data and policy support.

A phone call between Donald Trump and his Russian counterpart Vladimir Putin is on markets' radar this morning as the U.S. pushes for a ceasefire and peace deal in Ukraine - ahead of a slew of central bank meetings later in the week.

The leaders' conversation takes place in a moment of calm for traders, with stocks stabilising and progress to peace likely to send European gas prices down and the euro higher.

Putin's demands seem familiar, but Trump said they would be talking about land, power plants and "dividing up certain assets" and that he thinks agreement is possible.

The European Union's foreign policy chief, Kaja Kallas, said on Monday the conditions demanded by Russia to agree to a ceasefire showed Moscow does not really want peace.

Trade in the Asia session was driven by another burst of enthusiasm for China, which has been an unlikely beneficiary of Trump's rattling of U.S. markets and growth expectations.

The latest push came from the release of another surprisingly weak U.S. retail sales report, and the White House confirming reciprocal tariffs will come into effect on April 2 - putting pressure on the dollar and hoisting gold .

At the same time China has announced some childcare subsidies and other consumer-friendly measures, while data on Monday showed small signs of a pickup in retail spending.

The Hang Seng notched a three-year peak and its almost 23% rise for the year so far is easily the largest of any major market.

Gains were broad with miners, automakers, tech and retail stocks higher. The Shenzhen shares of electric-vehicle maker BYD leapt to a record as the company unveiled a new platform it says can recharge electric cars as quickly as pumping gas.

Well, I think investors are carrying on the optimism that was generated at the end of last week after the S&P 500 closed below the 10% decline threshold.

The New Zealand dollar was also at three-month highs with short-sellers seemingly spooked by New Zealand's exposure to China's consumers via dairy exports.

On investors' radar will be Nvidia's annual software developer conference, where CEO Jensen Huang, who will be delivering the keynote address on Tuesday, is expected to defend his nearly $3 trillion chip company's dominance as pressure mounts on its biggest customers to rein in the costs of artificial intelligence.

At the conference this week, Nvidia is also expected to reveal details of a chip system called Vera Rubin, the successor to its Blackwell chips.

Central bank meetings in Japan, the U.S., Britain, Sweden and Switzerland round out the week. Morning Bid: All Eyes on Trump-Putin Talk, and Then on Central Bank Deluge_1

Morning Bid: All Eyes on Trump-Putin Talk, and Then on Central Bank Deluge_1

Since the start of the year, Hong Kong's Hang Seng has surged while S&P 500 has struggled.

Key developments that could influence markets on Tuesday:

-Trump-Putin phone call

-German ZEW surveys

Source: Reuters

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Golden Gleam

Commodity

On Tuesday, the price of Gold surged to an unprecedented 3,013 USD per troy ounce, marking a new all-time high. This milestone follows a prolonged upward trend, driven by heightened investor demand for safe-haven assets ahead of the US Federal Reserve’s decision on interest rates.

Key Drivers Behind Gold’s Rally

The Federal Reserve’s two-day meeting, which began today and concludes Wednesday evening, is the focal point for investors. While the base scenario suggests the Fed will maintain current interest rates, market participants are closely watching for updated economic forecasts and insights from Chair Jerome Powell’s press conference. His remarks could explain future monetary policy, particularly amid ongoing trade tensions and tariff disputes.

Geopolitical uncertainties are also fuelling Gold’s ascent. On Monday, US President Donald Trump issued a stern warning to Iran, holding it directly accountable for any further attacks by Yemen’s Houthi rebels. The group has threatened to target foreign vessels in the Red Sea, including those of the US.

Additionally, Trump announced plans to hold talks with the Russian president on Tuesday morning to discuss a potential ceasefire, further adding to the global uncertainty driving investors toward Gold.

Technical Analysis of XAU/USD

On the H4 chart, XAU/USD has formed a tight consolidation range around the 2,945 level, signalling the continuation of an upward growth wave. Today, we anticipate the price to test the 3,010 level, which serves as a local target. Following this, a corrective pullback toward 2,945 (testing from above) is possible. Once this correction concludes, we expect a new growth wave targeting the 3,057 level. This scenario is technically supported by the MACD indicator. The signal line has exited the histogram zone and is pointing sharply downward, indicating potential for upward momentum after the correction.

On the H1 chart, XAU/USD has completed the structure of the growth wave, reaching the 3,015 level. We now expect the start of a corrective move toward 2,945. After this correction, the price will likely resume its upward trajectory, targeting the 3,057 level. Upon reaching this target, we will assess the possibility of a more significant correction towards the 2,900 level. This outlook is further confirmed by the Stochastic oscillator. Its signal line is currently below the 80 level and trending downwards towards 20, suggesting a high probability of a corrective phase.

Conclusion

Gold’s record-breaking rally reflects a combination of macroeconomic uncertainty, geopolitical tensions, and technical momentum. With the Federal Reserve’s decision and global developments in focus, the precious metal remains a key asset for investors seeking stability. As the market navigates these dynamics, further milestones for Gold prices appear increasingly likely.

Source: ACTIONFOREX

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Blue River

Technical Analysis

This is a follow-up analysis of our prior report, “USD/JPY: Yen strength elements emerged ahead of BoJ meeting next week” dated 16 January 2025.

Since our last publication, the price actions of the USD/JPY have transformed into a three-month medium-term downtrend where it tumbled by around 8% from its 10 January 2025 high of 158.88 to its recent 11 March low of 146.54.

The recent three-month Japanese yen strength against the US dollar has been supported by hawkish remarks from key Bank of Japan (BoJ) officials including Governor Ueda that guided BoJ’s third rate hike on 24 January to increase its key policy interest rate to 0.5%.

Also, economic data in the past two months have supported BoJ’s current monetary policy stance of “gradual increases in interest rates” as Japan’s core-core inflation rate (excluding food and energy) accelerated to 2.5% y/y in January, its highest rise since March 2024, above BoJ’s price target of 2%.

Secondly, wage growth for Japanese employees has moved in line with BoJ’s outlook as well. Last Friday, Rengo, the largest Japanese Trade Union Confederation announced in its preliminary report that its members have secured pledges from companies of an average 5.46% rise in wages for the 2025 fiscal year starting from April, the biggest wage rise in 34 years, and above last year’s increase of 5.28%.

Aggressive US trade tariffs policy created uncertainty in Japan’s growth prospects

The recent outlook on Japan’s inflation and wage growth trend has triggered a swift rally in longer-term sovereign bond yields in Japan. The 10-year Japanese Government Bond (JGB) yield has risen to 1.50%, its highest level since 2008.

Given the rapid rise in the 10-year JGB yield that is likely to increase funding costs in Japan coupled with the rising risk of slower economic growth globally due to the US White House’s aggressive trade tariffs policy, market participants expect BoJ to stand pat on Wednesday, 19 March monetary policy decision and await for BoJ Governor Ueda’s latest guidance with the likelihood of another rate hike to be enacted in June or July according to consensus at this time of the writing.

Narrowing US Treasuries-JGBs yield spreads support further JPY strength

Fig 1: 10-YR & 2-YR yield spreads of US Treasuries/JGBs medium-term trends as of 18 Mar 2025 (Source: TradingView, click to enlarge chart)

The 10-year and 2-year yield spreads of the US Treasury notes over JGBs have continued to narrow (trended downwards) after they hit key pivotal resistances of 3.60% and 3.84% respectively in early January.

If their downward trajectory remains intact where the 10-year and 2-yield spreads of the US Treasury notes over JGBs may see further downside towards 2.40% and 2.90% respectively, which in turn may trigger further downside pressure on the USD/JPY (see Fig 1).

Watch the key resistance of 150.70/151.50 on USD/JPY

Fig 2: USD/JPY medium-term trend as of 18 Mar 2025 (Source: TradingView, click to enlarge chart)

The recent rebound of 2.2% in the past five sessions seen in the USD/JPY from its intraday low of 146.54 on 11 March to its current level of 149.80 at this time of the writing is likely to be a minor corrective rebound sequence within a medium-term downtrend phase.

Watch the 150.70/151.50 key medium-term pivotal resistance and a break below 148.25 intermediate support may trigger another impulsive down move sequence to retest 146.90 before the next medium-term support comes in at 144.80 (see Fig 2).

On the other hand, a clearance above 151.50 invalidates the bearish scenario for a squeeze up toward the next medium-term resistance at 154.15.

Source: ACTIONFOREX

Risk Warnings and Disclaimers

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Warren Takunda

Economic

Donald Trump’s trade wars are splintering the global economy and unpicking progress made to reboot growth and tackle inflation, the Organisation for Economic Co-operation and Development (OECD) has said.

In its latest update on the health of the world economy, the leading Paris-based institution downgraded the prospects for global growth this year and next, including a sharp hit to activity in the US, Canada and Mexico.

The OECD cut its forecast for UK growth by 0.3 percentage points this year to 1.4%, and by 0.1 percentage points for 2026 to 1.2%, underscoring the challenge for the chancellor, Rachel Reeves, before next week’s spring statement.

The body representing the world’s richest economies said recent higher levels of economic growth and progress to bring down inflation was being undermined by the fallout from higher trade barriers and mounting geopolitical uncertainty.

Cutting its global growth forecast for this year from 3.3% to 3.1%, it said that significant risks still remained. The global economy grew by 3.2% in 2024.

Higher and broader increases in trade barriers would hit growth and add to inflation, while a climbdown would help reduce uncertainty and strengthen activity.

“Significant risks remain. Further fragmentation of the global economy is a key concern. Higher and broader increases in trade barriers would hit growth around the world and add to inflation,” the OECD said in its interim economic outlook report.

The OECD said: “Governments need to find ways of addressing their concerns together within the global trading system to avoid a significant ratcheting-up of retaliatory trade barriers between countries …

“A broad-based further increase in trade restrictions would have significant negative impacts on living standards.”

Basing its projections on the assumption that Trump pushes ahead with plans to impose 25% tariffs on almost all merchandise imports from Canada and Mexico from April, the OECD said activity would be hit and inflation stoked across all three economies.

It said Mexico would be pushed into a deep recession this year – with output shrinking by 1.3% in 2025 and 0.6% in 2026 – and almost halved its forecasts for growth in Canada.

It reduced its US growth forecasts from 2.5% to 2.2% for this year and from 2.1% to 1.6% in 2026. Growth in China is projected to slow from 4.8% this year to 4.4% in 2026.

In its first report since Trump’s return to the White House in January, the OECD said a further escalation of trade tensions would cause significantly more damage for the world economy.

In a scenario in which 10% blanket tariffs were imposed on all US imports – a threat Trump made on the campaign trail before last November’s election – with a matched response from all trading partners, it said global output could fall by 0.3% within three years relative to its current forecast. The US would be hit significantly, with output declining by 0.7% by the third year and inflation rising by an average 0.7 percentage points a year.

Canada and Mexico would also be affected significantly, reflecting their comparatively open economies and high exposure to the downturn in demand in the US and elsewhere.

With the UK government on the back foot on the economy before next week’s spring statement, Reeves said the OECD report showed the world was already changing in response to mounting trade uncertainty.

“Increased global headwinds such as trade uncertainty are being felt across the board. A changing world means Britain must change too, and we are delivering a new era of stability, security and renewal, to protect working people and keep our country safe,” Reeves said.“This means we can better respond to global uncertainty, with the UK forecast to be Europe’s fastest-growing G7 economy over the coming years – second only to the US.”

The downbeat OECD assessment comes before an expected UK growth downgrade from the Office for Budget Responsibility (OBR), the independent Treasury watchdog, due alongside next week’s spring statement.

The OBR had previously expected growth of 2% this year and 1.8% in 2026, but official figures and business surveys have since shown output skirting close to zero amid weakness in business and consumer confidence.

Highlighting the pressure on households and the challenge for the government and the Bank of England, the OECD held its predictions for UK inflation at 2.7% this year and 2.3% in 2026.

Last month, the Bank halved its own UK growth forecast for 2025 – from 1.5% to 0.75% because of weakness in household and business confidence. On Friday, official figures showed the UK economy contracted by 0.1% in January.

Source: Poundsterlinglive

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Risk Warnings and Disclaimers

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Warren Takunda

Economic

The German stock market and the euro continued to rise ahead of Tuesday’s parliamentary vote on a major spending bill.

The proposal, initiated by Germany’s Chancellor-in-waiting Friedrich Merz, will allow Germany to spend beyond 1% of Gross Domestic Product (GDP), or roughly €45 billion, for defence. The bill’s passage will also enable the government to create a special fund of up to €500 billion for infrastructure investment.

Last Friday, Merz reached an agreement with the Green party on the debt-funded spending package, clearing a key hurdle of the final parliamentary votes. The three parties, including Merz-led CDU/CSU, the SPD, and the Greens, hold 520 seats in the Bundestag lower house, more than enough to make the two-thirds majority to amend the constitutional law.

The DAX rose 0.73% to 23, 154.57 on Monday, just 1% below its all-time high of 23,419.48 on 6 March. The euro rose 0.43% against the US dollar to 1.0922, holding a near four-month high after reaching 1.0947 last week, despite a slight pullback during Tuesday’s Asian session.

European defence stocks skyrocket

Defence stocks surged since mid-February after US President Donald Trump launched peace talks with Russian President Vladimir Putin, initially excluding the European Union and Ukraine. The US president's decision to halt all military aid to Ukraine has increased the urgency for the European Union to boost defence spending.

In early March, the European Commission leader Ursula von der Leyen proposed a total of €800 billion in special funds for the bloc’s defence budget, urging member states to raise their military spending by an average of 1.5% of GDP.

Following this proposal, Merz unexpectedly announced plans to exempt defence spending from Germany’s debt brake. The 27 member states subsequently endorsed Merz’s plan and reached an agreement to bolster the bloc’s defence spending at a summit in Brussels on 6 March.

European major defence and aerospace stocks, including Rheinmetall, BAE Systems, and Rolls Royce Holdings, all skyrocketed over the past month. These major manufacturers of ammunition and air defence systems are expected to secure substantial contracts from EU member states, particularly Germany.

Shares in the German arms manufacturer Rheinmetall have surged 52% month-over-month and 123% year-to-date, repeatedly hitting new highs. BAE Systems and Rolls-Royce Holdings have also seen gains of 42% and 36% this year, respectively.

The Euro Stoxx Aerospace & Defence Index has risen 33% year-to-date, outpacing the 8% rally in the pan-European Stoxx 600. Meanwhile, Germany’s benchmark DAX has climbed 16% this year, outperforming most global indices.

The euro may continue to rise against the dollar

The common currency has strengthened by 7% against the US dollar since its low in January amid optimism surrounding the surge in European defence spending. The Germany-led fiscal reform is expected to inject hundreds of billions of euros into defence and infrastructure, potentially revitalising what was once Europe’s strongest economy.

Conversely, the US dollar has weakened significantly against other G10 currencies amid an escalating global trade war. Analysts anticipate further declines due to growing economic uncertainties in the United States. “I still view any USD rallies as selling opportunities and would be fading any USD upside across the G10 board,” Michael Brown, a senior research strategist at Pepperstone London, wrote in a note. The Federal Reserve’s rate decision on Wednesday will be a crucial event for the currency market.

Any dovish shift by the central bank could place additional pressure on the dollar, potentially pushing the euro even higher.

Source: Euronews

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Warren Takunda

Economic

The Japanese yen has weakened ahead of a crucial Bank of Japan (BoJ) policy meeting, with the USD/JPY exchange rate climbing back to the 150.00-level.

The currency’s recent slide reflects growing market anticipation regarding BoJ’s stance on interest rates, as well as external influences such as rising U.S. Treasury yields and stronger-than-expected U.S. retail sales data.

A significant driver of the yen’s depreciation has been the steady increase in U.S. bond yields. The U.S. 2-year Treasury yield, which hit a low of 3.83% on March 11, climbed to 4.06% following robust U.S. retail sales data for February.

The report showed a 1.0% month-over-month increase in control retail sales, reversing January’s 1.0% contraction. This data has eased concerns about a sharp slowdown in the U.S. economy, prompting investors to reassess their expectations for Federal Reserve rate cuts.

"USD/JPY has been supported by the pick-up in US yields over the past week," noted Lee Hardman, Senior Currency Analyst at MUFG Bank Ltd. "The strength of U.S. retail sales has reinforced expectations that the Fed will remain cautious about cutting rates in the near term."

The strengthening U.S. dollar, closely tied to short-term yield spreads, has placed additional downward pressure on the yen. The market remains sensitive to any policy cues from both the Federal Open Market Committee (FOMC) and the BoJ, with both institutions set to announce their latest policy decisions tomorrow.

Market expectations overwhelmingly indicate that the BoJ will maintain its current policy stance. However, speculation around the central bank’s terminal rate has intensified following recent speeches by BoJ officials. A Bloomberg survey of 52 economists pegged the median expected terminal rate at 1.25%, with estimates ranging from 0.50% to 2.50%.

"While the market is fully priced for no immediate change in BoJ policy, recent discussions around the terminal rate suggest the potential for a higher level than previously anticipated," Hardman commented. "Investors will be closely watching for any signals from Governor Ueda regarding this."

Deputy Governor Shinichi Uchida recently underscored the uncertainty surrounding the terminal rate, emphasizing that the BoJ does not have a predetermined target. Meanwhile, Policy Board Member Hajime Takata suggested that conditions are evolving toward a normalization of policy. As a result, expectations for rate hikes have gradually risen, with the market now pricing in a terminal rate near 1.20%, up from around 0.90% at the end of 2024.

Wage Growth and Inflation Considerations

Japan’s wage growth data remains a critical factor in the BoJ’s decision-making process. The recent Rengo wage negotiations delivered a stronger-than-expected outcome, with an overall wage increase of 5.46% and a base pay rise of 3.84%. These figures exceeded Bloomberg’s consensus estimates of 5.1% and 3.4%, respectively, reinforcing expectations that the BoJ could pursue further rate hikes.

"The Rengo wage announcement is a very important part of the BoJ’s inflation outlook," Hardman stated. "The latest figures provide Governor Ueda with room to signal further hikes ahead. We expect the next 25bp hike in July, but there is a risk of it coming sooner, in June."

Governor Kazuo Ueda is expected to reaffirm the central bank’s progress in reaching its inflation target, potentially laying the groundwork for a 25-basis-point rate hike in July, or even earlier in June. While the BoJ is unlikely to signal an immediate policy shift, market participants will scrutinize Ueda’s remarks for any hints of a tightening bias.

Market Strategy: Selling USD/JPY on Rallies

Given the evolving outlook, analysts at MUFG maintain a strategy of selling USD/JPY on rallies. "We would expect the recent adjustment in terminal rate pricing to be maintained following the BoJ meeting," Hardman remarked. "Our bias remains selling USD/JPY on rallies, as the prospect of higher Japanese rates continues to build."

As markets await tomorrow’s dual central bank decisions from the BoJ and the Fed, traders will remain focused on any policy signals that could shape currency movements in the weeks ahead.

Source: Poundsterlinglive

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FXOpen

Economic

Forex

As shown on the NZD/USD chart today, the exchange rate is around 0.58250—the highest level for the Kiwi against the US dollar since December 2024.

NZD strength is supported by optimism about China’s economy, a key trading partner for New Zealand. The Hang Seng Index (Hong Kong 50 on FXOpen) is near three-year highs, driven by:

→ Optimism surrounding AI development in China, including models from DeepSeek and Alibaba.→ Government stimulus measures boosting the Chinese economy.

Meanwhile, traders are assessing the USD’s outlook in light of the Trump administration’s trade tariff policies.

Technical Analysis of NZD/USD

The recent rally accelerated after bulls broke through the downward trendline (shown in orange). However, bears may expect a correction due to three key factors:

→ The price is near the 0.58000 level, which previously acted as support (as indicated by arrows). It may now serve as resistance, limiting further gains.

→ The RSI indicator is in overbought territory, unsurprising given the rally’s pace over the past week.

→ The price is near the upper boundary of the ascending channel (in place since early 2025), which could also act as resistance to further upside.