The USD gained against its counterparts on Friday, supported by safe-haven flows, despite the slower-than-expected revised GDP rate for Q4 25 disappointing traders. Once again, the greenback’s safe-haven qualities allowed it to rise. Overall, we continue to view the USD’s safe-haven status as the main factor behind its direction, while the market’s attention may start shifting towards the Fed’s interest rate decision on Wednesday. Today, the US releases the industrial output growth rate, yet the USD’s safe-haven flows continue to keep it supported.
USD corrects lower in the FX market
The USD gained against its counterparts on Friday and on a macroeconomic data, the slower than expected revised GDP rate for Q4 25, was a disappointment for traders, yet once again the safe-haven qualities of the greenback allowed it to rise. Overall we continue to view the USD’s safe haven status as the main factor behind its direction, yet we also note that the market’s attention may start shifting towards the release of the Fed’s interest rate decision on Wednesday. Today we get from the US the industrial output growth rate, yet the USD’s safe haven qualities may overshadow the release.
Xcellence Research Team opinion
Should we see the market’s cautious approach being enhanced, we may see the USD gaining further ground, while a possible easing of the market’s worries could weigh on the USD.
RBA’s interest rate decision and Canada’s CPI rates for February
In the FX market we also note the release from Australia of RBA’s interest rate decision in tomorrow’s Asian session. The bank is expected to hike rates by 25 basis points for a second meeting in a row and should the bank actually proceed with a rate hike and opt to also have a hawkish forward guidance, we may see the Aussie getting some support. Other than that we also note the release of Canada’s CPI Rates for February. Th release gains on attention as we had a weak employment report for February from Canada on Friday, while BoC is to release its interest rate decision on Wednesday.
Xlence Research Team opinion
For the time being we see the Aussie as being supported on a monetary level, yet should RBA hike rates and issue a dovish forward guidance me see the interest rate decision turning to a dovish hike, thus weighing on the Aussie. North of the US border a possible wider slow down of the CPI rates than expected, the Loonie may lose ground in the FX market.
The US strikes Kharg Island escalating the war in Iran
The US striked the Iranian Kharg Island in an escalation of the war in Iran. Despite the US stating that it hit military objectives on the island, Kharg Island is the main export hub for Iranian oil with the US military strike sending a clear message threatening the Iranian oil “lifeline”. We expect the war to escalate further as the US is trying to raise an alliance that would take the control of the Straits of Hormuz from the Iranians.
Xlence Research Team opinion
Further escalation of the war in Iran could enhance market worries for the supply side of the international oil market and thus could provide additional support for oil prices. On the other hand, a possible calming of the oil market could weigh on oil prices.
US equities correct higher and Bitcoin is on the rise
US equities seem to be on the rise as the week begins given an improvement of the market sentiment. The news that Meta is about to proceed with layoffs of 20% of its personnel, while Nvidia’s annual developer conference is to start today. It should be noted that also Bitcoin was on the rise today after slightly edging higher over the weekend. Despite technical reasons being supportive for the crypto’s price, also the expectations for increased institutional crypto-purchases seem to be supporting Bitcoin’s price.
Xlence Research Team opinion
Should we see the market sentiment improving further we may see US stock markets rising, while Bitcoin’s price could get additional support as the bullish market sentiment seems to be gathering momentum. As a word of caution, we note that the market sentiment may turn more cautious, as the war in Iran is closely watched, worries for inflationary pressures in the US economy are still present and the Fed’s interest rate decision is nearing.
Disclaimer: This information is not considered investment advice or an investment recommendation, but instead a marketing communication.
