Navigating the Equities Rally, FX Dynamics, and Inflationary Signals in February

Last Thursday marked the conclusion of February, closing with a surge in equities. The market attributed these movements to the in-line Personal Consumption Expenditures (PCE) print, which alleviated concerns of another spike in inflation.

Last Thursday marked the conclusion of February, closing with a surge in equities. The market attributed these movements to the in-line Personal Consumption Expenditures (PCE) print, which alleviated concerns of another spike in inflation. However, since most components were known before the release, the outcome was not entirely surprising. Deciphering what was month-end related cross-asset and what was not proves challenging.

E-mini SP500 Futures 

 Source: ATAS Charts CTF Data Provider In the FX, there was a mix of performances. The Chilean Peso (CLP) outperformed, seemingly driven by positioning as the pair reached exhaustion above 990 earlier in the week. The Japanese Yen (JPY) experienced sharp gains into 4 pm, likely tied to month-end dynamics, while the Swiss Franc (CHF) underperformed. The latter's decline intensified following the announcement of SNB President Jordan's upcoming departure in September. EURCHF broke through its 200-day Moving Average, shifting focus to 0.9680/0.9700. CHF shorts have been popular in 2024, particularly in the macro community, with the Swiss Consumer Price Index (CPI) print on Monday serving as a crucial test for this positioning.

Shifting focus to inflation, this morning's attention is on the European inflation figures. Following last Wednesday prints from France, Germany, and Spain, economists expect Euro area headline inflation at 2.58% YoY and core inflation at 2.99% YoY. Earlier in the week, there were hopes in the market that this print might revive differentiation trades and prompt a decline in EURUSD. However, with inflation close to 3%, such a scenario seems unlikely. EURUSD did dip towards 1.0800 last Friday, driven more by month-end supply than fundamental factors. In the short term, 1.0780/1.0800 remains a downside level to watch, with 1.0860/80 on the upside.

In the broader market, the rangebound nature has kept short-dated volatility exceptionally compressed. An additional point of focus is the low FX convexity, with 1-year 10-delta flies near 20-year lows for many G10 pairs, providing an attractive hedge in a market increasingly tilted towards risk.

In other developments, a notable month-end JPY buying spree last Friday morning led to USDJPY squeezing back higher. Ueda's remarks at the G20, expressing uncertainty about achieving a sustainable inflation target, contributed to the move. China's PMI data was generally in line with expectations, with optimism surrounding future output expectations. Sun Lu highlights the People's Bank of China's (CB) efforts to cap onshore USDCNY around 7.20, coupled with a steady fixing just above 7.10 since the start of the year. The recent uptick in Northbound equity inflow (US$8bn this month) raises the likelihood of a flush out of CNH short positioning, although the medium-term bias remains towards owning long-dated USCNH topside.

USDJPY H4

 Source: Finlogix ChartsThis content may have been written by a third party. ACY makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied by any third-party. This content is information only, and does not constitute financial, investment or other advice on which you can rely.

规则: ASIC (Australia), FSCA (South Africa)
read more
ATFX Market Outlook 3rd July 2025

ATFX Market Outlook 3rd July 2025

Wednesday’s ADP report showed a surprise decline of 33,000 private-sector jobs in June, marking the first contraction since March 2023 as economic uncertainty weighed on hiring. U.S. equities surged, with the S&P 500 and Nasdaq closing at record highs, driven by gains in tech stocks and relief following the U.S.–Vietnam trade agreement, which eased concerns over prolonged trade tensions
ATFX | 55分钟前
Dollar Rebounds, Risk FX Holds Strong | 2nd July, 2025

Dollar Rebounds, Risk FX Holds Strong | 2nd July, 2025

On July 2, the USD stabilizes as Fed rate cut bets build. GBP/USD nears 1.3750 highs, NZD/USD extends above 0.6120, and AUD/USD holds near 0.6820 despite soft retail sales. USD/JPY recovers to 146.20, while silver dips below $36. Markets await US labor data and Fed remarks for direction ahead of July 4.
Moneta Markets | 22小时4分钟前
ATFX Market Outlook 2nd July 2025

ATFX Market Outlook 2nd July 2025

Fed Chairman Powell emphasised the need for more data before considering interest rate cuts, with a July cut still a possibility. On Tuesday, the Nasdaq and S&P 500 closed lower due to weakness in large tech stocks, with the Nasdaq down 0.82% and the S&P 500 down 0.11%. In contrast, the Dow rose by 0.91% amid volatile trading and low liquidity.
ATFX | 23小时59分钟前
WTI Slides as Geopolitical Risks Ease | 1st July, 2025

WTI Slides as Geopolitical Risks Ease | 1st July, 2025

WTI dips below $64.50 as Middle East tensions ease, dampening supply fears. Silver struggles under $36, while AUD and NZD stay muted on weak China PMI. USD/JPY steadies near 145.90, and the yen holds gains on USD weakness. Traders now eye US ISM PMI and Fed minutes for clues on policy and market direction.
Moneta Markets | 1天前
US500, EURUSD, USDJPY

US500, EURUSD, USDJPY

New record high for US 500 amid relief rally; Eurozone preliminary CPI to be within ECB’s target; EURUSD hits 4-year high; US NFP report the highlight of the week; USDJPY eases
XM Group | 2天前
Oil Rises, Dollar Stalls as Risk Appetite Builds | 27th June, 2025

Oil Rises, Dollar Stalls as Risk Appetite Builds | 27th June, 2025

WTI crude nears $75 on strong US inventory draw, boosting risk sentiment. The US Dollar remains weak amid Fed independence fears, lifting AUD/USD to 0.6880 and EUR/USD near 1.1700. USD/JPY retreats while USD/CNY stays steady on a firmer PBOC fix. Focus shifts to US PCE data and global central bank commentary.
Moneta Markets | 5天前