(Feb 19): London copper eased on Wednesday as US President Donald Trump's threat to impose 25% tariffs on automobiles and semiconductor chips raised concerns of about metal demand.

Three-month copper on the London Metal Exchange (LME) CMCU3 eased 0.6% to US$9,418 a metric ton by 0423 GMT.

Trump said on Tuesday he intends to impose auto tariffs "in the neighbourhood of 25%" and similar duties on semiconductors and pharmaceutical imports, the latest in a series of measures threatening to upend international trade.

He said sectoral tariffs on pharmaceuticals and semiconductor chips would also start at "25% or higher", rising substantially over the course of a year.

"Trump is actually considering implementing further tariffs on auto... which could lead to a slowdown in global growth and may result in disruptions to the global supply chain. Such disruptions could cause copper to experience some weakness going forward," said Kelvin Wong, OANDA's senior market analyst, Asia Pacific.

Citi said Trump is more motivated to impose tariffs on copper in his second term because of the metal's growing importance to key emerging global competitive industries like energy transition and artificial intelligence.

On the geopolitical front, Trump's administration said on Tuesday it had agreed to hold more talks with Russia on ending the war in Ukraine after an initial meeting that excluded Kyiv, a departure from Washington's previous approach that rallied US allies to isolate Russian President Vladimir Putin.

Source: Theedgemarkets

New Zealand Dollar initially weakened following RBNZ’s 50bps rate cut today, but quickly regained ground as Governor Adrian Orr indicated that the pace of easing will slow in the coming months. Orr suggested that the central bank is likely to implement just more 25bps cuts, in April and May, provided that economic conditions unfold as expected. However, the Kiwi’s upside remains limited, as RBNZ revised its terminal rate forecast downward to 3.1% by year-end, slightly below November’s projection of 3.2%.

Technically, we’d maintain the view that AUD/NZD’s choppy rise from 1.0940 is a corrective move. So upside should be limited by 1.1177 resistance to bring near term reversal. Break of 1.1071 support will argue that the pattern from 1.1177 has started the third leg, and should decline towards 1.0940 support next.

Outside of NZD-driven moves, the broader forex market remains subdued, with a lack of major catalysts. Dollar is the weakest performer of the day so far, as the momentum from this week’s recovery has faded. Traders are now looking ahead to FOMC minutes, though they are unlikely to provide new insights, instead reaffirming that Fed remains cautious and in no hurry to cut rates again.

British Pound is also under pressure, ranking as the second weakest currency, as investors await the release of UK CPI data. A hot inflation print could diminish expectations for a consecutive BoE rate cut in March, potentially offering some relief to the currency. Swiss franc rounds out the three weakest performers, showing broad softness.

On the stronger side, New Zealand Dollar leads the market. Yen follows, benefiting from continued speculation over future BoJ policy hikes, while the Australian Dollar also holds firm. Euro and Canadian Dollar are positioning in the middle.

In Asia, at the time of writing, Nikkei is down -0.38%. Hong Kong HSI is down -0.28%. China Shanghai SSE is up 0.54%. Singapore Strait Times is up 0.11%. Japan 10-year JGB yield is up 0.002 at 1.439. Overnight, DOW rose 0.02%. S&P 500 rose 0.24%. NASDAQ rose 0.07%. 10-year yield rose 0.072 to 4.544.

RBNZ cuts by 50bps, signals further easing through 2025

RBNZ cut the Official Cash Rate (OCR) by 50bps to 3.75%, as widely expected, while maintaining a clear easing bias.

The central bank stated that “if economic conditions continue to evolve as projected, the Committee has scope to lower the OCR further through 2025.” According to the latest projections, the OCR is expected to decline to 3.1% by year-end and remain at that level until early 2028.

RBNZ acknowledged that economic activity remains subdued, though it expects growth to recover in 2025, driven by lower interest rates encouraging spending. However, elevated global economic uncertainty is likely to weigh on business investment. The bank also noted that inflation is expected to be volatile in the near term, influenced by a weaker exchange rate and higher petrol prices.

Regarding global risks, the RBNZ flagged concerns and warned that higher global tariffs could slow growth in key trading partners, dampening demand for New Zealand exports and weakening domestic economic momentum over the medium term.

However, the impact on inflation is “ambiguous”, depending on factors such as trade diversion, supply-chain adjustments, and financial market reactions.

Australian wages growth slow 0.7% qoq, pressures easing

Australia’s wage price index rose 0.7% qoq in Q4, marking a slowdown from 0.9% qoq and missing expectations of 0.8% qoq. This matches the lowest quarterly growth since March 2022, reinforcing signs that wage pressures are easing, albeit still elevated.

On an annual basis, wages increased 3.2% yoy, making it the slowest pace since Q3 2022. Private sector wage growth came in at 3.3% yoy, the weakest since Q2 2022. Public sector wages rose 2.8% yoy, falling below 3% for the first time since Q2 2023.

BoJ’s Takata: Gradual policy shifts should continue beyond January hike

BoJ Board Member Hajime Takata emphasized the need for the central bank to continue to “implement gear shifts gradually, even after the additional rate hike decided in January 2025”, to mitigate the risk of rising prices and financial market overheating.

Takata noted in a speech today that as “positive corporate behavior” persists, BoJ should consider a “further gear shift” in policy.

He highlighted three key risks that could drive prices above BoJ’s baseline scenario: a stronger wage-price cycle, inflationary pressures from domestic factors, and market volatility, especially in the exchange rates, stemming from a recovery in the US economy.

Nevertheless, due to uncertainties surrounding the US economy and the challenge of identifying the neutral interest rate, Takata advocated for a “vigilant approach”.

Japan’s trade deficit widens as imports surge, exports to China drop

Japan’s trade deficit expanded sharply in January, reaching JPY -2.759T, the largest shortfall in two years, as imports surged 16.7% yoy, far exceeding the expected 9.3% yoy gain.

Meanwhile, exports rose 7.2% yoy, falling slightly short of the 7.7% yoy forecast, with strong shipments to the U.S. (+18.1% yoy) offset by a -6.2% yoy decline in exports to China.

On a seasonally adjusted basis, exports declined -2.0% mom to JPY 9.253T, while imports climbed 4.7% mom to JPY 10.109T, leading to a JPY -857B trade deficit.

Looking ahead

UK CPI is the main focus in European session. EUrozone will release current account. Later in the day, main focus is on FOMC minutes while US will also publish building permits and housing starts.

AUD/USD Daily Report

Daily Pivots: (S1) 0.6335; (P) 0.6352; (R1) 0.6368; 

Intraday bias in AUD/USD stays neutral for consolidations below 0.6373 temporary top. Rebound from 0.6087 is seen as a correction to the fall from 0.6941. In case of another rise, upside should be limited by 38.2% retracement of 0.6941 to 0.6087 at 0.6413. On the downside, break of 0.6234 support will suggest that the rebound has completed as a correction, and turn bias back to the downside for retesting 0.6087 low. Nevertheless, sustained break of 0.6413, will pave the way back to 61.8% retracement at 0.6615.

In the bigger picture, fall from 0.6941 (2024 high) is seen as part of the down trend from 0.8006 (2021 high). Next medium term target is 61.8% projection of 0.8006 to 0.6169 from 0.6941 at 0.5806. In any case, outlook will stay bearish as long as 55 W EMA (now at 0.6504) holds.

Economic Indicators Update

Source: ACTIONFOREX

USD/CAD trades within a falling wedge pattern, a bullish formation that indicates a potential breakout to the upside.

The pair could find immediate support around the falling wedge’s upper boundary at 1.4100.

The immediate resistance zone appears near the nine-day EMA at 1.4230, aligned with the upper boundary of the falling wedge.

The USD/CAD pair gives up its recent gains from the previous session, trading near 1.4180 during Asian hours on Wednesday. Technical analysis on the daily chart suggests a falling wedge pattern, a bullish formation that suggests a potential breakout to the upside.

Additionally, the 14-day Relative Strength Index (RSI) remains above the 30 level, supporting the current bearish outlook. However, a decline below 30 would indicate oversold conditions for the USD/CAD pair, potentially hinting at an upcoming upward correction.

However, the USD/CAD pair remains below the nine- and 14-day Exponential Moving Averages (EMAs), indicating persistent bearish sentiment and weak short-term price action. This positioning suggests continued selling pressure.

On the downside, the USD/CAD pair may find immediate support at the lower boundary of the falling wedge, aligning with the psychological level of 1.4100. A break below this channel would strengthen the bearish bias, potentially driving the pair toward the three-month low of 1.3927, last reached on November 25.

The USD/CAD pair may encounter immediate resistance near the nine-day EMA at 1.4230, which aligns with the upper boundary of the falling wedge. A further hurdle is seen at the 14-day EMA of 1.4263. A breakout above this key resistance zone could shift the bias to bullish, potentially driving the pair toward the psychological level of 1.4300.

USD/CAD: Daily Chart

Canadian Dollar PRICE Today

The table below shows the percentage change of Canadian Dollar (CAD) against listed major currencies today. Canadian Dollar was the weakest against the New Zealand Dollar.

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Canadian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent CAD (base)/USD (quote).

Source: FXSTREET

GBP/USD holds ground above 1.2600 ahead of UK CPI data

GBP/USD remains firm after losses in the previous session, trading around 1.2610 during the Asian session on Wednesday. Traders await the release of January’s Consumer Price Index (CPI) data from the United Kingdom (UK) scheduled to be released later in the day. The Pound Sterling (GBP) could see significant movement in response to the inflation report, which may influence the Bank of England’s (BoE) interest rate-cut strategy amid ongoing inflationary pressures.

The pair finds support as the US Dollar (USD) struggles amid falling Treasury yields, despite ongoing caution regarding the Federal Reserve’s (Fed) policy outlook. Investors await the release of the FOMC Minutes later in the North American session.

GBP/USD Price Analysis: Bulls pause ahead of key fundamental drivers

GBP/USD retreated slightly on Tuesday, edging down 0.16% to 1.2605 after an extended rally that propelled it to its highest level since mid-January. Despite this mild pullback, the broader outlook remains constructive, as the pair continues to set its sights on the 100-day Simple Moving Average (SMA) at 1.2660.

Momentum indicators suggest a temporary cooling-off period rather than a structural shift. The Relative Strength Index (RSI) has dipped to 62, signaling a slowdown in buying pressure but still holding in positive territory. Meanwhile, the Moving Average Convergence Divergence (MACD) histogram remains flat with green bars, reinforcing the notion that the latest price action is more of a technical correction than a bearish reversal. Read more...

GBP/USD slips amid strong US Dollar, hawkish Fed tilt

The Pond Sterling (GBP) retreated after rallying for three consecutive days, dropping some 0.19% even though the United Kingdom's (UK) jobs data was solid. Meanwhile, a hawkish tilt by Federal Reserve (Fed) officials and United States (US) President Donald Trump's tariffs policies add to the uncertainty, underpinning the Greenback. GBP/USD trades at 1.2602.

In the UK, the economy added 107K people to the workforce, exceeding estimates of 50K. Consequently, the Unemployment Rate in the fourth quarter stood steady at 4.4%, while pay growth, as revealed by Average weekly earnings before bonuses, jumped 5.9%. Read more...

Source: FXSTREET

USD/CHF weakens to around 0.9030 in Wednesday’s early European. 

Global geopolitical stress boosts the safe-haven flows, supporting the CHF. 

Fed’s Daly said the central bank should keep short-term borrowing costs where they are until the progress is more visible.

The USD/CHF pair softens to near 0.9030 during the early European session on Wednesday. Tension-filled negotiations on the Russia-Ukraine conflict boost the safe-haven flows, benefiting the Swiss Franc (CHF). Traders will take more cues from the FOMC Minutes, which will be published later on Wednesday. 

Ukraine President Volodymyr Zelenskiy said no peace deal could be made behind his back, per Reuters. Zelenskiy decided to postpone his visit to Saudi Arabia planned for Wednesday until March 10 to avoid giving "legitimacy" to the United States-Russia meetings. Investors will closely watch the developments surrounding the Russia-Ukraine peace talks. Any signs of escalating tensions between the two countries could boost the safe-haven currency like the CHF and create a headwind for the pair. 

Data released by the Federal Reserve Bank of New York on Tuesday showed that the NY Empire State Manufacturing Index climbed to 5.7 in February from a fall of 12.6 in January. Meanwhile, San Francisco Fed President Mary Daly said on Tuesday that prospects of further rate cuts in 2025 remain uncertain despite an overall positive lean to US economic factors. 

Market players brace for remarks by Fed officials later this week to gather more clues about the path ahead for US interest rates. Any hawkish comments from Fed policymakers could underpin the Greenback against the CHF in the near term.

Source: FXSTREET

EUR/USD trades with mild gains near 1.0450 in Wednesday’s Asian session.

Trump floated 25% tariffs on US auto, drug and chip imports. 

Eurozone ZEW Economic Sentiment Index jumped to 24.2 in February vs. 24.3 expected. 

The EUR/USD pair posts modest gains to around 1.0450 during the Asian trading hours on Wednesday, bolstered by the weakening of the US Dollar (USD). However, tariff concerns and tense Russia-Ukraine negotiations might boost the Greenback, a safe-haven currency, and cap the upside for the major pair. 

US President Donald Trump said late Tuesday that he would likely impose tariffs on automobile, semiconductor and pharmaceutical imports of around 25%, with an announcement coming as soon as April 2. 

Ukraine President Volodymyr Zelenskiy said no peace deal could be made for the time being. He postponed his visit to Saudi Arabia planned for Wednesday until March 10 to avoid giving "legitimacy" to the US-Russia talks. The uncertainty, geopolitical tensions and tariff threats could lift the USD and act as a tailwind for the pair. 

Investors await the release of the FOMC Minutes for the January meeting, which are due later on Wednesday. This report could offer some hints about how policymakers are weighing the risk of a global trade war.

Across the pond, the Eurozone ZEW Economic Sentiment Index came in at 24.2 in February versus 18.0 prior, missing the estimation. The rising bets that the European Central Bank (ECB) will further cut the interest rates three times this year might weigh on the Euro (EUR). 

Source: FXSTREET