Forexlive Americas FX news wrap: US consumer confidence sinks, drags down risk assets

• US February consumer confidence 98.3 vs 102.5 expected
• Richmond Fed composite index for February higher at 6 versus -4 last month
• Ukraine agrees US minerals deal – report
• Ukraine will have to “cede control of some land for peace” – report
• Zelensky plans to travel to Washington on Friday – report
• Fed’s Barkin: Uncertainty argues for caution in last stages of inflation fight
• More from Barkin: Federal workforce is only 2% of national job market
• US treasury auctions off $70 million of 5 year notes at a high yield of 4.123%
• Fed’s Barr: Monetary policy is tied to financial stability
• The House doesn’t have the votes for the budget resolution. Stocks down, yields down
• US House speaker Johnson opens the door to delaying budget vote
• Sheinbaum says she aims to close a tariff deal with the US by next Tuesday
• Opposing signals from Canada and Mexico around tariff deadline
• US Treasury Sec Bessent: US economy is brittle underneath
• German’s Merz: It is ruled out in the near future that we will reform the debt brake
• US December CaseShiller 20-city house price index +4.5% y/y vs +4.4% expected
• Bank of America CEO: We don’t expect the Fed to cut rates further
• ECB’s Schnabel: It’s becoming increasingly unlikely that rates are holding back spending
• ECB’s Schnabel: Subdued growth not proof of restrictive policy

Markets:

• Gold down $35 to $2916
• US 10-year yields down 10 bps to 4.29%
• WTI crude oil down $1.60 to $69.10
• S&P 500 down 0.5%
• EUR leads, CAD lags

On Friday I outlined 8 things that are weighing on market sentiment and that continues to be the case. Today, soft US consumer confidence underscored fears that the spending is softening and that triggered a round of selling in equities, buying in bonds and softness in the US dollar. In addition, Congress seems to be stalled on the Trump tax cut plan, though we may get a vote later.

Tariffs continue to be a problem for the market but I was struck at how unworried Mexico’s President was in her comments today. There was also some optimism about a Ukraine deal and I think it’s fair at this point to fully price in an end to the war. The oil market certainly took a step in that direction today with WTI busting below $70, though I would argue the Russia oil is all making it to market.

The euro is at the intersection of a few trends right now. Peace is a tailwind and Schnabel continues her hawkish turn. At the same time, optimism about German spending has been a driven this week and Merz today said reforming the debt brake won’t be done in the near-term and is ‘complex’ so that pours some cold water on that theme.

The yen continues to find a steady bid as the risk-off theme dominates. Warren Buffett was a tell on the weekend as he talked about continuing to buy Japanese assets while staying on the sidelines in the US. Technically, today’s break of 149.00 worked its way down to 148.55, which is the lowest since October. It looks to close right at the figure though, which doesn’t make for a clean break.

This article was written by Adam Button at www.forexlive.com.