Home › Market News › FX Carry Trade, Weekday Pattern Trade, and Gold Futures
The Economic Calendar:
MONDAY: S&P Global Manufacturing PMI (8:45a CT), Construction Spending (9:00a CT), ISM Manufacturing PMI (9:00a CT), Fed Musalem Speech (10:35a CT)
TUESDAY: LMI Logistics Managers Index (5:00a CT), Redbook (7:55a CT), NY Fed Treasury Purchases (9:30a CT), Fed Williams Speech (1:20p CT), API Crude Stock Change (3:30p CT)
WEDNESDAY: MBA Mortgage Applications (6:00a CT), ADP Employment Change (7:15a CT), S&P Global Composite PMI (8:45a CT), Factory Orders (9:00a CT), ISM Services Index (9:00a CT), EIA Petroleum Status Report (9:30a CT), Fed Beige Book (1:00p CT)
THURSDAY: Challenger Job Cuts (6:30a CT), Balance of Trade (7:30a CT), Import/Export Prices (7:30a CT), Jobless Claims (7:30a CT), Nonfarm Productivity (7:30a CT), Unit Labor Costs (7:30a CT), Wholesale Inventories (9:00a CT), EIA Natural Gas Report (9:30a CT), Fed Waller Speech (2:30p CT), Fed Balance Sheet (3:30p CT), Fed Bostic Speech (6:00p CT)
FRIDAY: February Jobs Report (7:30a CT), Used Car Prices (8:00a CT), Fed Bowman Speech (9:15a CT), Fed Williams Speech (9:45a CT), Fed Kugler Speech (11:20a CT), Fed Chair Powell Speech (11:30a CT), Baker Hughes Rig Count (12:00p CT), Fed Kugler Speech (12:00p CT), Consumer Credit Change (2:00p CT)
Key Events:
Source: Trading Economics
The EUR/JPY exchange rate can serve as a valuable indicator of “risk appetite” and carry trade activity in the market.
Carry trades often involve borrowing in a low-yielding currency, like the Japanese yen, and investing in higher-yielding assets elsewhere. When risk sentiment sours and traders become risk-averse, these carry trades unwind, strengthening the yen as investors repay their yen-denominated loans.
This dynamic can create a double whammy for traders caught in an unwinding carry trade. Not only do their risky assets decline in value, but they also face losses from the appreciating yen, which increases the cost of repaying their loans.
Therefore, news headlines proclaiming a “yen rally as a safe haven” should be interpreted cautiously. While a rising yen may signal risk aversion, it can also inflict significant pain on investors who have leveraged themselves in carry trades.
The dollar/yen pair (USD/JPY) exhibits a similar dynamic, making it another critical barometer of risk sentiment in the currency market.
Source: TradingView
Keep an eye on Canadian Dollar futures (6C) and the Mexican Peso futures (6M).
The trade war is heating up! After a brief pause for negotiations, the U.S. is set to impose fentanyl-related tariffs on Canada and Mexico on March 4th.
This comes on top of the 10% tariffs already in effect on Chinese goods. President Trump confirmed the impending tariffs on February 27th, signaling a potential escalation in trade tensions.
How did the market react to this news? Let’s say the S & P 500 decided to take a nosedive! Even the market has its limits on how much uncertainty it can handle. Maybe it’s worried the President might slap tariffs on gravity next!
Nvidia’s strong earnings report briefly buoyed market sentiment, but lingering tariff uncertainty and the impact of domestic policy changes raise concerns about economic growth and investor confidence. Futures are hovering near the critical 6,000 level, with some analysts eyeing key support levels, including the recent “DeepSeek low” of 5,935.50.
President Trump’s pronouncements on tariffs continue to dominate market action, with headlines suggesting that tariffs on Canada, Mexico, and China will proceed as scheduled on March 4th. This ongoing headline-driven volatility has some market participants urging caution, advising investors to “fade moves” and avoid overreacting to tariff news.
While the market remains sensitive to tariff headlines, there’s a growing sense that investors need to develop a tolerance for trade-related news. The recent dip, which many anticipated as a buying opportunity, saw surprisingly low participation, suggesting a degree of hesitation among investors.
Looking toward March seasonals, we find:
The S&P 500 has shown a distinct weekly pattern in 2025, with Wednesdays exhibiting the strongest average gains, followed by Tuesdays and Thursdays.
Conversely, Mondays and Fridays have tended to be weaker, with the S&P 500 showing average declines on these days.
This pattern suggests a mid-week strength and weekend weakness trend. Compared to the historical average, 2025 has been more volatile, with larger average price swings in both directions.
While past performance can offer insights, it does not guarantee future market behavior.
Treasuries rallied, with yields declining amid persistent concerns about economic growth. The 10-year yield fell five basis points to 4.20%, marking a 21 basis point drop for the week. Similarly, the 2-year yield dropped eight basis points to 3.98%, also down 21 basis points on the week.
Despite the recent decline, the 10-year yield is testing its 200-day moving average, which remains relatively flat. Despite various market narratives, this highlights the lack of directional movement in rates since August 2023.
While recent comments from FOMC members Musalem and Logan suggest a growing acceptance that the neutral rate may be near the current policy rate, most of the FOMC still views policy as restrictive. The recent lack of significant U.S. macroeconomic data releases makes a shift in this view unlikely in the near term.
Near-Term Certainty: The market is very confident (93% probability) that the Fed will hold rates steady (425-450 bps) at the March 19, 2025 meeting.
Gradual Easing Expected: Looking further out, the table below indicates a gradual shift towards rate cuts. The probabilities shift from holding steady to the right, indicating a growing likelihood of cuts.
Mid-2025 Shift: By the May 7, 2025 meeting, the market sees a significant probability of the first cut, with a 30.1% chance of rates being in the 400-425 bps range.
Peak Probability in Mid-2025: The highest probability of rates being in the 400-425 bps range is around the June to July 2025 meetings. This suggests that the market expects the Fed to make a few cuts by now.
Continued Easing into 2026: The table shows a trend of easing into 2026, with the highest probabilities shifting towards the lower rate ranges 350-375 bps.
Gold futures have retreated approximately $100 from their recent all-time highs, falling below their 21-day moving average for the first time since early January. While this pullback may concern some traders, key support levels remain in place, including the 50-day moving average at $2755 and the lower bound of a significant upward trend channel.
Despite the recent decline, gold’s momentum remains strong, although some potentially negative technical signals are emerging. Open interest in Comex April gold futures is declining on steady volume, and prices are struggling to hold above previous support areas (2885). A close below the $2,885 level confirmed a negative shift in momentum, potentially leading to a new trading range for gold. For now, the trading range is weakening.
While narratives surrounding Fort Knox and potential gold location swaps may contribute to market sentiment, market flows and fundamentals remain the primary drivers of gold’s price action.
Source: TradingView
President Trump announced on Truth Social the termination of a 2022 oil transaction agreement with Venezuela, citing unmet electoral conditions, unfulfilled repatriation of criminals, and a general lack of effectiveness—the move pressures Venezuelan President Maduro to comply with U.S. demands or face economic collapse.
The decision also impacts Chevron, which has been lobbying to continue operations in Venezuela, where U.S. refiners source coveted heavy oil. President Trump is strategically leveraging the situation, using Chevron’s interests and Venezuela’s economic vulnerability to push for free and fair elections in the country.
Meanwhile, oil prices reacted to President Trump’s comments on a potential ceasefire between Russia and Ukraine. Trump indicated that a deal with Putin is possible, but emphasized that concessions from Russia are necessary.
A heated public debate with President Zelensky over a potential partnership with Ukraine on rare earth minerals initially created some volatility in prices but then subsided by the end of Friday trading.
Bitcoin experienced a significant pullback, falling 11.6% last week and reaching a new three-month low.
And then, Sunday morning, a Trump “crypto bailout” as BTC +7% and ETH up 11% as of this writing:
Still not even in the top 16 Bitcoin drawdowns.
According to a waste management expert, the chances of finding a hard drive and key to a $669 million bitcoin fortune lost to a landfill are 1 in 902 million.
The notorious case of Brit James Howells’ bitcoin fortune lost to landfill continues amid legal attempts to access the site or to acquire it outright.
In 2013, James Howells, an IT worker from Newport, Wales, accidentally threw away a hard drive containing the private keys to his Bitcoin wallet. At the time, the 8,000 Bitcoins on the drive were worth a relatively small amount. However, as the value of Bitcoin skyrocketed, the value of his lost coins has now grown to around $669 million.
These performance charts track the daily, weekly, monthly, and yearly changes of various asset classes, including some of the most popular and liquid markets available to traders.
