Focus on US GDP and Fed Speak

Beyond here is the March 2018 high at 1.8381.

Above: GBPCAD rises to the cusp of new seven-year highs. The RSI in the lower panel is signalling overbought conditions.

Source: Poundsterlinglive

The US Dollar Index strengthens to near 106.65 in Thursday’s early European session. 

The negative outlook of the DXY remains intact below the 100-day EMA, but further consolidation cannot be ruled out. 

The first support level is seen at 106.20; the immediate resistance level emerges at 106.80. 

The US Dollar Index (DXY) gains traction to near 106.65 during the early European session on Thursday. The cautious mood amid the tariff uncertainty from US President Donald Trump could lift the Greenback. 

However, the weaker US economic data have prompted traders to raise bets for interest rate cuts, now seeing two quarter-point reductions this year, with the first likely in July and the next as early as October. This, in turn, might cap the upside for the DXY. 

According to the 4-hour chart, the DXY keeps the bearish vibe as the price remains capped below the key 100-period EMA Exponential Moving Average (EMA). Nonetheless, further consolidation cannot be ruled out as the 14-day Relative Strength Index (RSI) crosses above the midline near 53.35. 

The lower limit of the Bollinger Band at 106.20 acts as an initial support level for the index. A decisive break below the mentioned level could expose 105.80, the low of December 9. Extended losses could see a drop to 105.41, the low of December 6. 

On the upside, the first upside barrier for the DXY emerges at 106.80, the upper boundary of the Bollinger Band. Sustained bullish momentum above this level could pave the way to the 107.00-107.10 region, the psychological level and the 100-EMA EMA. The next hurdle to watch is 107.38, the high of February 19. 

US Dollar Index (DXY) 4-hour chart

Source: FXSTREET

Retirees treat it as bank deposits; interest in active management increasing amid aging population.

Most people understand that investing is about balancing risks and returns. Many also recognize that being overly cautious — to the point where returns fail to keep up with inflation — is not a sound investment strategy.

However, in Korea, retirement pensions face this very issue. According to the Korea Retirement Pension Institute, the average annual return on retirement pensions over the past 10 years has been 2.07 percent, while the inflation rate stood at 2.2 percent.

The retirement pension system was first introduced in 2005 to ensure the public has a stable and secure life as they grow older. While the national pension covers basic living expenses, the retirement pension is intended to provide additional financial stability after retirement.

In this super-aging country, strengthening this security framework is crucial — especially considering that the national pension is depleting at a rapid pace.

Many Koreans have yet to fully grasp the importance of growing their retirement savings.

A 60-year-old man who spent decades in a blue-collar job shared his concerns, saying, "My pension might be my only source of income when I grow older. I couldn't risk investing it and losing everything."

Younger Koreans often see retirement as a distant concern. Lee, a 29-year-old office worker, received a retirement allowance from her previous company after switching jobs but withdrew the entire amount at once. "I thought it would be better to invest in other riskier assets for higher returns."

Retirement payouts here are widely perceived as safe assets and are predominantly managed in deposit-like products. This preference is reflected in the choices of 87 percent of retirement pension holders, who opt for "ultra-low-risk investments."

While the government introduced a default option system in 2023 to boost returns, its impact has been limited, as many participants continue to favor low-risk options that can protect their principal, similar to bank deposits. The default option allows fund managers to automatically invest funds when account holders do not make an active selection.

Even when individuals try to choose financial products, a structural limitation remains, as the system does not actively support or encourage individuals to take a more proactive approach toward investing.

For instance, investing in exchange-traded funds (ETFs) listed in overseas markets — currently a favorite among Korean investors — is not allowed under the retirement pension system.

An older man fills out a job application at an older adult job fair in Suwon, Gyeonggi Province, in this October 2023 photo. 

"Effective diversification means spreading investments across a variety of asset classes, including risky assets, safe assets and emerging asset categories," said Kim Byung-duck, a senior research fellow at the Korea Institute of Finance. "However, regulations, such as the 70 percent cap on risk asset investment, still restrict portfolio flexibility. The limited list of eligible investment assets prevents a truly diversified approach."

Due to these constraints, most retirees and job changers opt to receive their retirement savings as a lump-sum payout rather than using them as a pension. In 2023, 89.6 percent of the 530,000 individual retirement pension accounts were closed, with funds withdrawn.

"Korea is facing a severe crisis of low birthrates and rapid aging before the national pension system has fully matured. Retirement pensions are failing to function effectively as a reliable source of retirement income," stated a 2022 report from the National Pension Research Institute.

However, there is a positive shift. Interest in active investment is rising, as evidenced by the significant outflow of retirement pension funds from banks to securities firms. Since investing in ETFs is only available through securities firms, this trend is expected to continue.

Market watchers predict that the retirement pension market will keep expanding as the population ages. Between 2011 and 2023, retirement pension assets increased 7.7 times from 49.9 trillion won ($34.6 billion) to 382.4 trillion won. If this growth trend continues, they are expected to surpass 500 trillion won by the end of 2026.

"Not all participants have investment expertise, and even those who do may struggle to achieve proper diversification due to asset size limitations," Hong Won-ku, a research fellow at Korea Capital Market Institute, said.

"To boost returns, it is essential to explore various strategies, including allowing retirement pension providers to manage assets based on their independent judgment. This shift would help overcome the limitations of individually driven investments," he said.

Source: Koreatimes

USD/CHF extends the rally to near 0.8970 in Thursday’s early European session. 

Global economic uncertainties and geopolitical tensions could boost the Swiss Franc. 

The estimate of the US Q4 GDP data will be in the spotlight later on Thursday. 

The USD/CHF pair trades in positive territory for the second consecutive day around 0.8970 during the early European session on Thursday. A modest recovery in the US Dollar (USD) provides some support to the pair. The estimate of US Gross Domestic Product (GDP) for the fourth quarter (Q4) will take center stage later on Thursday. 

The renewed levy of tariffs by US President Donald Trump on Canadian and Mexican imports has raised concerns about global trade tensions. Any signs of trade tensions, economic uncertainty and ongoing geopolitical tensions could drive demand for safe-haven currencies like the Swiss Franc (CHF) and create a headwind for USD/CHF. 

Worries over US economic growth have boosted expectations that the Federal Reserve (Fed) would deliver at least two rate cuts this year. This, in turn, might cap the upside for the pair. US consumer confidence declined the most since August 2021, falling to 98.3 in February versus 105.3 prior, according to the Conference Board. 

Meanwhile, New Home Sales in the US fell by 10.5% MoM to 657,000 units in January from 734,000 units (revised from 698,000) in the previous reading, according to the Commerce Department's Census Bureau on Wednesday. This figure came in weaker than the 680,000 units expected. Investors will closely monitor the US Q4 GDP report, which is due later on Thursday. In case of a stronger-than-expected outcome, this could lift the Greenback. 

Source: FXSTREET

Dollar traded broadly higher in Asian session, trying to stage a comeback after a failed rally attempt overnight. Renewed focus on tariffs appears to be driving some of the greenback’s momentum. Meanwhile, broader market sentiment is just steady following Nvidia’s strong earnings report, with lingering concerns over competition from China’s DeepSeek AI continue to weigh.

Tariffs are back in headlines after US Commerce Secretary Howard Lutnick revealed that the “big transaction” involving reciprocal tariffs is set for April 2. The date was pushed from April 1, as US President Donald Trump—citing superstition—chose to avoid making major policy moves on that day.

Lutnick also noted that Canada and Mexico could avoid the planned 25% tariffs if they can demonstrate sufficient progress on border security and fentanyl control. However, he added that Trump would ultimately decide whether to pause again or proceed with the tariffs.

Despite Nvidia reporting an impressive 78% year-over-year sales increase and a 93% jump in data center revenue, its struggle to rebound with momentum. The company has yet to fully recover from its 17% drop on January 27—its worst single-day decline since 2020—amid growing concerns about China’s emerging AI competitor, DeepSeek.

Elsewhere, Aussie is struggling despite comments from a top RBA official suggesting that rate cuts are not on auto-pilot and that further easing would require more disinflation evidence. This cautious stance should have provided some support for the Aussie, but broader risk-off sentiment is keeping the currency under pressure.

For now, Aussie is sitting at the bottom of today’s performance chart. Kiwi is also underperforming, while Swiss Franc is the third worst performer of the day so far. At the top of the performance table, Dollar leads, followed by Yen and Loonie. Euro and British Pound are positioning in the middle.

Technically, AUD/JPY’s fall from 102.39 resumed this week and further fall should now be seen to 100% projection of 102.39 to 95.50 from 98.75 at 91.86. As this decline is seen as the second leg of the corrective pattern from 90.10, strong support should be seen around there to bring reversal. But risk will continue to stays on the downside as long as 55 D EMA (now at 96.74) holds, in case of recovery.

In Asia, at the time of writing, Nikkei is up 0.14%. Hong Kong HSI is down -0.76%. China Shanghai SSE is down -0.49%. Singapore Strait Times is down -0.13%. Japan 10-year JGB yield is up 0.036 at 1.402. Overnight, DOW fell -0.43%. S&P 500 rose 0.01%. NASDAQ rose 0.26%. 10-year yield fell -0.049 to 4.249.

RBA’s Hauser: Global uncertainty justifies rate cut, but more easing depends on disnflation evidence

RBA Deputy Governor Andrew Hauser told the parliament today that mounting global uncertainty had a chilling effect on economic activity, which played a role in the board’s decision to cut the cash rate by 25 bps this month.

He noted that businesses are becoming increasingly cautious, delaying investment projects and expansion plans as they wait for clearer economic signals, “just to see how things pan out.”

This hesitation, he suggested, made a slight easing of monetary policy a “sensible” response to support economic stability.

However, Hauser emphasized that further rate cuts are not guaranteed and will depend on incoming inflation data. Policymakers remain optimistic about further disinflation but need to see clear evidence before committing to additional policy easing.

NZ ANZ business confidence rises to 58.4, on the path to recovery

New Zealand’s ANZ Business Confidence rose from 54.4 to 58.4 in February. However, the Own Activity Outlook, slipped slightly from 45.8 to 45.1, highlighting that while sentiment is improving, actual activity remains uncertain.

Pricing and cost indicators painted a mixed picture. Inflation expectations for the next year eased from 2.67% to 2.53% and cost expectations fell from 73.6 to 71.3. But wage expectations remained elevated at 79.2 despite fall from 83.1, and pricing intentions ticked up from 45.7 to 46.2.

ANZ noted that the economy is on the “path to recovery,” supported by lower interest rates and stronger-than-expected commodity export prices. However, the bank cautioned that the next phase of growth remains “a point of debate.”

The pace of expansion will depend on how households perceive current interest rates, the extent to which global uncertainty influences business investment, and whether firms push forward despite challenges. Additionally, potential labor shortages could emerge as a key constraint on further growth.

BoE’s Dhingra: Orderly trade fragmentation unlikely to require monetary policy response

BoE MPC member Swati Dhingra suggested that the inflationary impact of rising global tariffs could be tempered by weaker economic growth.

She added that if the global economy undergoes a “fragmentation in an orderly way,” monetary policy might not need to react immediately as prices readjust to new geopolitical shifts.

However, she cautioned that in an “extreme scenario” where multiple major economies erect significant trade barriers similar to those proposed by the US, “severe strain on a few sources of supply” could lead to sharp price spikes, reminiscent of those seen following Russia’s 2022 invasion of Ukraine.

Despite the risks, Dhingra downplayed the likelihood of a severe disruption, noting that “the world economy seems to be moving closer to an orderly fragmentation.”

Looking ahead

Swiss GDP, Eurozone M3 monthly supply will be released in European session. ECB will publish meeting accounts.

Later in the day, US will release GDP revision, durable goods orders and pending home sales.

USD/CHF Daily Outlook

Daily Pivots: (S1) 0.8920; (P) 0.8943; (R1) 0.8969; More…

USD/CHF recovered notably but stays below 0.9053 resistance and intraday bias remains neutral. The corrective pattern from 0.9200 could still extend lower. But strong support should be seen from 38.2% retracement of 0.8374 to 0.9200 at 0.8884 to complete it, and bring larger rise resumption. On the upside, above 0.9053 will bring retest of 0.9200 resistance. However, sustained break of 0.8884 will indicate bearish reversal, and target 61.8% retracement at 0.8690 instead.

In the bigger picture, decisive break of 0.9223 resistance will argue that whole down trend from 1.0342 (2017 high) has completed with three waves down to 0.8332 (2023 low). Outlook will be turned bullish for 1.0146 resistance next. Nevertheless, rejection by 0.9223 will retain medium term bearishness for another decline through 0.8332 at a later stage.

Economic Indicators Update

Source: ACTIONFOREX