The major assets staged a strong comeback on Wednesday, with European stocks leading the way after Germany unveiled a €500 billion infrastructure plan and Trump hinted at tariff relief for automakers.
The dollar slid across the board, while bond yields surged as investors moved away from safe havens and embraced risk despite mixed economic data.
Here’s a breakdown of the biggest moves and movers in the last trading sessions:
Headlines:
- AUD dips despite Australia’s solid Q4 growth as traders focus on trade risks
- Japan Jibun Bank Services PMI Final for February 2025: 53.7 (53.1 forecast; 53.0 previous)
- China Caixin services PMI for February: 51.4 (50.8 forecast, 51.0 previous)
- China sticks to “around 5%” growth target for 2025 as U.S. trade war looms
- RBNZ Gov. Adrian Orr resigned, Deputy Gov. Hawkesby will be the acting governor until March 31
- BOJ Deputy Governor Uchida remains hawkish but ruled out a March rate hike by saying it “wasn’t as if we would hike rates at every meeting”
- Swiss Inflation Rate for February 2025: 0.6% m/m (0.4% m/m forecast; -0.1% m/m previous); 0.3% y/y (0.2% y/y forecast; 0.4% y/y previous)
- Germany HCOB Services PMI Final for February 2025: 51.1 (52.2 forecast; 52.5 previous)
- Euro area HCOB Services PMI Final for February 2025: 50.6 (50.7 forecast; 51.3 previous)
- Euro area PPI for January 2025: 0.8% m/m (0.3% m/m forecast; 0.4% m/m previous); 1.8% y/y (1.3% y/y forecast; 0.0% y/y previous)
- Germany to ease government debt limits in major step aimed at boosting economy, defense spending
- U.S. crude oil inventories rose by 3.6M barrels in the week ending Feb 28 following a 2.3M-barrel draw in the previous week
- U.S. S&P Global Services PMI Final for February 2025: 51.0 (49.7 forecast; 52.9 previous)
- U.S. ISM Services PMI for February 2025: 53.5 (52.7 forecast; 52.8 previous); Employment Index rose to 53.9 vs. 52.3; Prices Index rose to 62.6 vs. 60.4 previous
- U.S. ADP Private-sector payrolls increased by 77,000 in February, down from a revised 186,000 in January
- Canada files formal complaint to WTO over U.S. tariffs
- Trump grants one-month exemption for US automakers from new tariffs on imports from Mexico, Canada
Broad Market Price Action:
Dollar Index, Gold, S&P 500, Oil, U.S. 10-yr Yield, Bitcoin Overlay Chart by TradingView
Markets roared back on Wednesday after President Trump signaled he might delay new tariffs on Canadian and Mexican auto imports for a month. That was a welcome relief for automakers like General Motors, Ford, and Stellantis, especially after direct talks between Trump and industry executives.
European stocks led the charge, with Germany’s DAX jumping 3.63% after German officials rolled out plans for a massive €500 billion infrastructure fund and changed budget rules to increase defense spending. German 10-year bond yields jumped 29.3 basis points, while French, Italian, and Spanish yields all rose more than 24 basis points as investors anticipated higher government borrowing.
Adding to the upbeat mood, the Eurozone’s services PMI held steady at 50.2 in February, showing modest growth despite France struggling at 45.3.
In the U.S., stocks bounced back from early losses despite some shaky economic data. The S&P 500 climbed 1.12% to 5,842.63, even as ADP’s February jobs report came in much weaker than expected with just 77,000 new positions added. Meanwhile, fresh data signaled growing inflation pressures in the U.S. services sector.
U.S. oil prices stayed under pressure, falling 2.86% to $66.31 per barrel after an unexpected buildup in U.S. crude inventories. Safe haven gold inched higher to $2,915, while bitcoin held steady just under $91,000.
In the U.S. bond market, selling pressure pushed the 10-year Treasury yields up to 4.280% as investors moved away from safe assets.
FX Market Behavior: U.S. Dollar vs. Majors:
Overlay of USD vs. Major Currencies Chart by TradingView
The U.S. dollar weakened throughout the trading day, with the currency falling against the majors except CHF. The steepest drop was against the euro, driven by Germany’s fiscal stimulus news, weak US jobs data, and optimism over potential tariff exemptions.
USD swung higher in early Asian trading but soon turned lower. The downswings picked up in Europe and gained momentum as traders priced in Switzerland’s CPI data, Europe’s PMIs, and Germany’s stimulus plans.
The biggest hit came after the U.S. ADP jobs report, which showed private sector job growth at just 77,000 – well below the expected 140,000. Traders took that as a sign of economic weakness, despite the stronger than expected ISM services PMI that followed.
The dollar briefly tried to rebound after solid US ISM services and factory orders data, but selling pressure returned as markets focused on potential tariff relief following White House comments about exemptions for automakers.
Upcoming Potential Catalysts on the Economic Calendar:
- Switzerland unemployment rate at 6:45 am GMT
- U.K. construction PMI at 9:30 am GMT
- Euro Area retail sales at 10:00 am GMT
- U.S. Challenger job cuts at 12:30 pm GMT
- ECB policy decision at 1:15 pm GMT
- Canada trade balance at 1:30 pm GMT
- U.S. initial jobless claims at 1:30 pm GMT
- U.S. revised unit labor costs and nonfarm productivity at 1:30 pm GMT
- U.S. trade balance at 1:30 pm GMT
- ECB press conference at 1:45 pm GMT
- FOMC member Harker to give a speech at 1:45 pm GMT
- Canada Ivey PMI at 3:00 pm GMT
- U.S. final wholesale inventories at 3:00 pm GMT
- FOMC member Waller to give a speech at 8:30 pm GMT
The European session will likely be driven by the ECB policy decision and press conference, with traders watching for any shifts in rate guidance that could move the euro.
In the U.S., Uncle Sam’s initial jobless claims, unit labor costs, and FOMC speeches will shape expectations for the Fed, keeping the dollar sensitive to labor market and inflation signals.
And as in previous days, keep an eye out for updates on the major economies’ retaliatory tariff plans as they could influence risk sentiment and the major assets’ intraday trends!
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