The USD is lower to start new trading week. What key level are in play to start the week.

The USD is lower vs the major currency pairs with the greeback moving the most vs the JPY (-0.74%), the NZD (-0.49%), AUD (-0.30% and the CHF (-0.28%). The dollar is modestly lower vs the EUR (-0.16%), and unchanged vs the GBP and CAD.

Over the weekend, Pres. Trump did not rule out a U.S. recession in 2025, saying that the country is undergoing a “period of transition” due to major policy shifts.

Yields are reacting to the negative with the

• 2-year at 3.958%, -0.48 basis points
• 5-year at 4.024%, -7.0 basis points
• 10-year at 4.245% -7.2 basis points
• 30-year at 4.548%, -6.7 basis points

US stocks are lower following a sharply lower week in markets, with the S&P dropping 3.1%, its worst weekly decline since early September, and the Nasdaq index falling -3.45% after falling -3.47% the week prior. Concerns over tariff policies and growth are to blame.

Key economic data in North America this week includes:

• Wednesday, March 12

  • USD Core CPI m/m: 0.3% (Forecast) vs. 0.4% (Previous)
  • USD CPI m/m: 0.3% (Forecast) vs. 0.5% (Previous)
  • USD CPI y/y: 2.9% (Forecast) vs. 3.0% (Previous)
  • CAD BOC Rate Statement
  • CAD Overnight Rate: 2.75% (Forecast) vs. 3.00% (Previous)
  • CAD BOC Press Conference

• Thursday, March 13

  • GBP UK GDP MoM: 0.1% (Forecast) vs 0.4% (Previous)
  • USD Core PPI m/m: 0.3% (Forecast) vs. 0.3% (Previous)
  • USD PPI m/m: 0.3% (Forecast) vs. 0.4% (Previous)
  • USD Unemployment Claims: 226K (Forecast) vs. 221K (Previous)

• Friday, March 14

  • USD Prelim UoM Consumer Sentiment: 63.8 (Forecast) vs. 64.7 (Previous)
  • USD Prelim UoM Inflation Expectations: 4.3% (Previous)

The USDCAD is near unchanged today after In Canada, Mark Carney won the leadership of Canada’s Liberal Party, positioning himself to replace Justin Trudeau as prime minister. The former central bank chief of Canada and the U.K. is expected to call an election soon, aiming to capitalize on shifting political momentum after U.S. President Trump’s aggressive trade policies, including 25% tariffs on Canada.

Carney won with 85% of party members’ votes, defeating former finance minister Chrystia Freeland. His leadership bid gained traction as Trudeau’s unpopularity dragged the Liberals down, with polls showing a significant recovery since Carney entered the race. While the Conservatives still lead, some polls indicate a tightening contest. Carney’s main opponent will likely be Pierre Poilievre, a populist Conservative leader.

The Fed is officially in the black-out period ahead of its next interest rate decision. The Fed is officially in the black-out period ahead of the next interest rate decision. The Federal Open Market Committee (FOMC) is scheduled to meet on March 18-19, 2025, to discuss and decide on the federal funds target rate.

Federal Reserve Chair Jerome Powell has indicated that, due to significant economic uncertainty stemming from recent policy changes, the Fed is likely to maintain the current interest rates in the coming months.

Other Fed officials including Waller, Harker, Kugler, Daly and Bostic more recently expressed the same tilt to unchanged sentiment BUT with different levels of caution on a potential slowdown.

In Europe today, ECB policymaker Peter Kažimír warned that inflation risks remain tilted to the upside, emphasizing the need for a cautious approach regarding interest rate decisions. He stated that the central bank must remain open-minded about whether to cut rates or pause, citing ongoing geopolitical and trade tensions as factors adding unpredictability to the economic outlook. Kažimír stressed that the ECB is looking for undeniable confirmation that disinflation will persist before making any policy shifts. Additionally, he noted that tariffs have historically led to slower growth and higher inflation. These remarks reinforce the growing expectation that the ECB is likely to hold rates steady in April, with market pricing currently reflecting a ~59% probability of a pause.

US stocks are sharply lower to start the new trading week with the futures implying:

• Dow -481 points after rising 232 points or 0.52% on Friday
• S&P -78 points after rising 31.68 points or +0.55% on Friday
• Nasdaq -322 points after rising 126.97 points or 0.70% on Friday

In other markets:

• Crude oil is trading up $0.40 or 0.59% at $67.44
• Gold is down -$4.10 or -0.13% at $2905
• Silver is down -$0.02 or -0.08% at $32.48
• Biitcoin is up $2300 on the day at $83,105 but down from Friday’s close at $86759. The low over the weeekend reached $80K.

WH NEC Hassett is saying on CNBC that the 1st quarter may see some downside in the first quarter but rise in the 2nd quarter as the trade policy gets figured out early April.

This article was written by Greg Michalowski at www.forexlive.com.