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FOREX: Tariff Threat Drives FX Risk Off, NZD/JPY Back Close To Aug 2024 Lows

FOREX
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Risk off has been the focus in the first part of Friday trade, with JPY and CHF the only G10 currencies higher against the USD at this stage. NZD and AUD have been underperformers. The USD BBDXY index is tracking modestly firmer, up +0.10%, to be near 1295.5. For the week, the index is up a little over 0.70%, which would be the first weekly gain since end Jan. Tariff concerns and the associated spill over to equity losses is the main driver of sentiment today, particularly in terms of yen crosses. 

  • NZD/USD was last close to 0.5600, off around 0.50%. This is close to key support and a break here would then open up a move to retest the Feb 3 lows of 0.5516. Earlier data showed stabilizing labor market trends, while still cautious consumer sentiment. These prints didn't impact FX sentiment.
  • NZD/JPY has fallen under 84.00, tracking lower for the 4th straight session. The pair is back to levels last seen in the early August risk off episode from last year. Lows at that juncture were at 83.07 (current levels sit near 83.80).
  • AUD/USD is near 0.6210/15, off around 0.35%, so slightly outperforming NZD. Downside focus for this pair is 0.6171 the Feb 4 low and 0.6088 the Feb 3 low. AUD/JPY is just under 93.00. note August 2024 lows for the pair were 90.15.
  • USD/JPY got to highs of 150.15, after we saw weaker than expected Tokyo CPI figures for February, but broader risk off trends soon took over. We hit lows of 149.10, but now sit back  around 149.60/65, up in yen terms by close to 0.10%.
  • Regional equity markets are all down sharply, the Asia Pac MSCI off 2%. US equity futures are close to flat, but have struggled for upside traction.
  • US yields are lower by around 2-4bps as Tsys see safe haven demand.
  • Looking ahead, German retail sales/unemployment, German/French/Italian February CPIs and Canadian December/Q4 GDP print. BoE’s Ramsden speaks. In the US, January income/spending, PCE prices, merchandise trade and February MNI Chicago PMI are released.
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Risk off has been the focus in the first part of Friday trade, with JPY and CHF the only G10 currencies higher against the USD at this stage. NZD and AUD have been underperformers. The USD BBDXY index is tracking modestly firmer, up +0.10%, to be near 1295.5. For the week, the index is up a little over 0.70%, which would be the first weekly gain since end Jan. Tariff concerns and the associated spill over to equity losses is the main driver of sentiment today, particularly in terms of yen crosses. 

  • NZD/USD was last close to 0.5600, off around 0.50%. This is close to key support and a break here would then open up a move to retest the Feb 3 lows of 0.5516. Earlier data showed stabilizing labor market trends, while still cautious consumer sentiment. These prints didn't impact FX sentiment.
  • NZD/JPY has fallen under 84.00, tracking lower for the 4th straight session. The pair is back to levels last seen in the early August risk off episode from last year. Lows at that juncture were at 83.07 (current levels sit near 83.80).
  • AUD/USD is near 0.6210/15, off around 0.35%, so slightly outperforming NZD. Downside focus for this pair is 0.6171 the Feb 4 low and 0.6088 the Feb 3 low. AUD/JPY is just under 93.00. note August 2024 lows for the pair were 90.15.
  • USD/JPY got to highs of 150.15, after we saw weaker than expected Tokyo CPI figures for February, but broader risk off trends soon took over. We hit lows of 149.10, but now sit back  around 149.60/65, up in yen terms by close to 0.10%.
  • Regional equity markets are all down sharply, the Asia Pac MSCI off 2%. US equity futures are close to flat, but have struggled for upside traction.
  • US yields are lower by around 2-4bps as Tsys see safe haven demand.
  • Looking ahead, German retail sales/unemployment, German/French/Italian February CPIs and Canadian December/Q4 GDP print. BoE’s Ramsden speaks. In the US, January income/spending, PCE prices, merchandise trade and February MNI Chicago PMI are released.