GBP/USD Holds Losses Near 1.2650 as Risk Aversion Intensifies, US Treasury Yields Climb

The US dollar firmed in early Asian hours on Thursday as Treasury yields ticked higher while investors assessed the outlook for tariffs and the economy under President Donald Trump.

Asian stocks were mixed with tech shares around the region getting little steer from heavyweight US chipmaker and artificial intelligence (AI) darling Nvidia's earnings overnight.

Cryptocurrency bitcoin languished below US$85,000 (RM377,499), while safe-haven gold was steady some US$40 below its record high as trade war worries kept market sentiment fragile.

Trump clouded the outlook for looming levies on top trading partners Canada and Mexico on Wednesday by signalling they would take affect on April 2, which would be another month-long extension.

However a White House official later said the previous March 2 deadline for the levies remained in effect "as of this moment", stirring further uncertainty about US trade policy.

US two-year Treasury yields rose to 4.09%, finding their footing following a slump to the lowest since Nov 1 at 4.065% in the prior session. The 10-year yield rose to 4.2772% from a low of 4.245% on Wednesday, a 2½-month trough.

The dollar and US yields have been under pressure in recent weeks as a run of soft economic indicators have combined with growth worries arising from Trump's tariffs.

Traders have raised bets for Federal Reserve interest rate cuts in recent days, now seeing two quarter-point reductions this year, with the first likely in July and the next as early as October.

Markets will look at GDP and durable orders data due on Thursday for any stronger signs of slowdown, while the Fed's preferred inflation gauge, the Personal Consumption Expenditure (PCE) inflation rate, is due on Friday.

"Markets are starting to feel less confidence about US growth," said Shoki Omori, chief global desk strategist at Mizuho Securities.

"I think US data surprises will continue to be towards the downside," although as economists start to adjust their forecasts towards weaker outcomes, and with inflation still "sticky", 10-year Treasury yields are unlikely to fall below 4%, Omori said.

In equities, Japan's Nikkei added just 0.1%, Australia's benchmark index climbed 0.5% and South Korea's Kospi slid 0.7%.

Hong Kong's Hang Seng gained 0.9%, with tech shares outperforming, while mainland blue chips rose 0.2%. Taiwan shares advanced 0.2%.

US Nasdaq futures were steady following a 0.3% rise in the regular session overnight, while S&P 500 futures were also little changed after the cash index ended the day flat.

Nvidia shares slipped 1.5% in extended trading following a 3.7% rally in regular trading on Wednesday. After the closing bell, the chipmaker published a strong growth forecast for the first quarter, although investors are accustomed to big beats from the company.

"Nvidia's earnings came with much less volatility than expected," said IG analyst Jun Rong Yeap.

"The absence of major surprises may have kept sentiment relatively calm," Yeap said.

"Sellers may find fault with its slight gross margin decline, but ... note that this stems from newer data centre products — ultimately beneficial for long-term growth."

Bitcoin was steady at US$84,742 following a more than 11% tumble so far this week.

Gold was little changed at US$2,912 per ounce.

Crude oil ticked up from two-month lows it hit following a surprise build in US fuel stockpiles.

Brent crude added 0.26% to US$72.72 a barrel. US West Texas Intermediate crude oil futures gained 0.23% to US$68.78.

Source: Theedgemarkets

The Indian Rupee trades on a flat note in Thursday’s Asian session. 

Rising US Dollar demand and continued capital outflows undermine the INR, but RBI intervention might cap its downside. 

The estimate of the US Q4 GDP report will take center stage later on Thursday.

The Indian Rupee (INR) holds steady on Thursday. The local currency remains on the defensive due to month-end US Dollar (USD) demand by importers. Additionally, capital outflows amid uncertainty over US trade tariffs contribute to the INR’s downside. Nonetheless, a likely foreign exchange intervention by the Reserve Bank of India (RBI) might help limit the Indian Rupee’s depreciation. 

Looking ahead, traders will keep an eye on the estimate of US Gross Domestic Product (GDP) for the fourth quarter (Q4), along with the weekly Initial Jobless Claims, which are due later on Thursday. Fedspeak will be in focus as it might offer some hints about the interest rate path in the United States. The Federal Reserve’s (Fed) Michelle Bowman, Beth Hammack and Patrick Harker are scheduled to speak. 

Indian Rupee steadies amid USD demand and foreign outflows

“Rupee traded very weak as FII sell-off continued and crude oil prices remained elevated amid US tariffs on Iran, which pushed oil demand higher. The dollar index at 106.65 also added to the pressure on the rupee,” said Jateen Trivedi, Research Analyst at LKP Securities. 

Late Wednesday, US President Donald Trump reiterated his insistence on 25% tariffs on Canada and Mexico, as well as adding the European Union (EU) to the list of countries from which he will penalize US consumers for importing. 

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. 

Atlanta Fed President Raphael Bostic said late Wednesday that the Fed should hold interest rates where they are, at a level that continues to put downward pressure on inflation, per Bloomberg.

Richmond Fed President Thomas Barkin noted that he will follow a wait-and-see approach regarding central bank interest rate policy until it is clear inflation is returning to the Fed's 2% target.

USD/INR’s outlook remains bullish despite consolidation in the shorter term

The Indian Rupee trades flat on the day. The USD/INR maintains the constructive view on the daily chart, characterized by the price holding above the key 100-day Exponential Moving Average (EMA). The upward momentum is reinforced by the 14-day Relative Strength Index (RSI), which stands above the midline near 59.50, suggesting that further upside looks favorable. 

In the bullish case, the first upside target to watch is 87.25, the high of February 25. Extended gains above this level could push the price to an all-time high near 88.00. The next hurdle is seen at 88.50. 

On the flip side, the low of February 21 at 86.48 acts as an initial support level for the pair. Further south, the next contention level is located at 86.14, the low of January 27, followed by 85.65, the low of January 7.

Source: FXSTREET

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The chart shows rolling 24-hour loss-making transactions topping any other period so far this year. While it does not confirm that users sold coins sent to exchange wallets, the data underscores the atmosphere of uncertainty among newer market participants.

STH in-loss exchange transactions. Source: CryptoQuant

“On the other hand, long-term holders have remained largely unfazed by the recent plunge, maintaining their holdings and providing support against additional price declines,” Avocado_onchain observed.

STH vs. LTH SOPR. Source: CryptoQuant

Source: Cointelegraph

Source: Euronews

Above: GBPEUR (top) and the U.S. S&P 500 index.

Source: Poundstrerlinglive