[Monday Market Open: Risk-Off Sentiment Dominates as Markets Eye Trump Tariffs and Geopolitical Tensions]
— Yen Strengthens, Equities Drop, Gold Remains a Buy-on-Dip Play —
■ Clear Risk-Off Tone Emerges, USD/JPY Dips into 148 Range
At the start of the Tokyo session, risk aversion took center stage. The Nikkei 225 dropped over 1,500 points at one point, and the USD/JPY pair plunged into the 148 range as yen-buying dominated.
Key drivers behind the move:
- The U.S. PCE deflator exceeded expectations → reigniting inflation concerns
- However, markets are shifting focus toward “stagflation” (persistent inflation + economic slowdown)
- As a result, U.S. bond yields fell, and the dollar weakened — a departure from traditional reactions
- The conventional logic of “inflation = rate hikes = dollar strength” is being challenged, replaced by a pure risk-off flow of risk asset sell-off, bond buying, and yen appreciation
■ Trump’s Tariff Agenda Reignites Global Trade War Fears
Former President Trump is not only pushing auto tariffs but is also signaling a more aggressive reciprocal tariff policy. Markets interpret this as a renewed threat of global trade friction, weighing on investor sentiment.
As a result, we’re seeing renewed flows into:
- U.S. Treasury buying → lower yields
- Dollar selling
- Stock sell-offs
- Yen strength
■ U.S. Demands on Ukraine Raise Geopolitical Alarms
The U.S. is reportedly demanding from Ukraine:
- Control over investment in ports, railways, mineral resources, and energy infrastructure
- Establishment of a joint fund where the U.S. would recoup aid and interest (4% annually)
This is increasingly seen as blurring the lines between “economic aid” and resource acquisition, becoming a new geopolitical risk.
This development could inflame tensions between China, Russia, and Europe — further enhancing flows into safe havens like the yen and gold.
■ Heading into London/NY Sessions: Risks Still in Play
While some technical rebound is possible for USD/JPY and crosses, upside remains capped amid persistent selling pressure.
Upcoming key events could keep markets on edge:
📝 Today’s Key Data
- 🇭🇰 Hong Kong February Retail Sales
- 🇬🇧 UK February Consumer Credit & M4 Money Supply
- 🇿🇦 South Africa February Trade Balance
- 🇩🇪 Germany March CPI (flash)
- 🇺🇸 Chicago PMI (forecast 45.0 vs. prior 45.5)
💬 Scheduled Speeches
- Villeroy de Galhau (Governor, Banque de France)
- Panetta (Governor, Bank of Italy)
📌 Note: UK & Europe are now on daylight saving time – adjust timing accordingly.
■ Trading Strategy: Stay Long on Gold, Adapt to Yen Strength
- Gold (XAU/USD):
Risk-off flows and geopolitical tensions support buy-on-dip strategies.- Support: 2,210–2,230
- Upside target: 2,280–2,300+
- USD/JPY:
Short-term support in the 148s, but clear topside resistance above 151.
If risk-off deepens, a retest of the 147s cannot be ruled out. - Euro and Pound Crosses:
With ECB and BOE rate cuts on the radar, rallies may be short-lived.
Sell-on-rally stance preferred for EUR/JPY and GBP/JPY.
