Asset Summary – Thursday, 26 February
US DOLLAR is facing downward pressure as indicated by a decline in the dollar index to approximately 97.5. Uncertainty surrounding potential increases in US tariffs and a lack of concrete details are contributing to a cautious market sentiment. While the Federal Reserve is expected to hold steady on interest rates in the near term, ongoing US-Iranian nuclear talks and speculation about a potential rate hike by the Bank of Japan further weigh on the dollar’s performance. The index’s continued losses suggest lingering doubts regarding White House economic policy.
BRITISH POUND faces downward pressure due to a combination of domestic political uncertainty, a softening labor market, and expectations of interest rate cuts by the Bank of England. The upcoming UK consumer inflation data and external factors like US tariffs and US-Iran nuclear talks add to the cautious market sentiment. The potential for a looser fiscal policy in the UK, coupled with concerns about the country’s debt trajectory, further weighs on investor confidence, while a resilient US Dollar also limits the pound’s upside potential.
EURO is exhibiting a complex dynamic, influenced by both internal and external factors. While the ECB remains patient, anticipating a return to its inflation target without immediate policy adjustments, the Euro’s strength is being closely monitored for its potential impact on price pressures. Stronger Euro valuations could potentially curb inflation by making imports cheaper. Geopolitical tensions and US policy decisions, particularly regarding tariffs and nuclear talks, are also injecting volatility into the market. Furthermore, diverging opinions within the Federal Reserve and robust US economic data could strengthen the US Dollar, potentially limiting the Euro’s upside. Positioning data indicates a tug-of-war between Euro bulls and bears, making the currency highly sensitive to upcoming economic data releases and central bank communications.
JAPANESE YEN is currently experiencing mixed signals. Recent hawkish comments from Bank of Japan officials, hinting at potential future rate hikes, are providing support and strengthening the yen. However, concerns remain regarding the pace of tightening, influenced by government appointments and apprehension towards further rate increases. Geopolitical risks and a weaker US dollar are also contributing to safe-haven demand for the yen. Technically, the USD/JPY pair shows potential for further upside movement, but intervention fears and overall risk aversion could limit gains, creating a complex trading environment for the currency.
CANADIAN DOLLAR faces headwinds from renewed US trade protectionism, particularly a new 15% global surcharge impacting Canada’s export-oriented economy. Simultaneously, cooling Canadian inflation data increases speculation that the Bank of Canada might end its current interest rate pause. A strong US dollar, bolstered by hawkish Federal Reserve signals and persistent core PCE, adds further pressure. While oil price gains offer some support, the narrowing yield advantage for Canada and trade-related uncertainties are overriding factors, limiting the currency’s upside potential despite a favorable court ruling. However, the Canadian Dollar has shown some strength against the USD recently as markets await news on US-Iran nuclear talks.
AUSTRALIAN DOLLAR is currently experiencing upward pressure driven by expectations of further interest rate hikes by the Reserve Bank of Australia in response to persistent inflation. The anticipation of a higher cash rate provides a supportive yield environment, attracting investors and strengthening the currency against others, like the US Dollar, which is currently experiencing weakness. While economic data indicates a controlled deceleration rather than a severe contraction, the RBA remains focused on bringing inflation back within its target range, suggesting a cautious but firm monetary policy stance. However, the currency remains sensitive to global risk sentiment, developments in China, and any potential rebound in the US Dollar.
DOW JONES faces a mixed outlook as markets digest Nvidia’s earnings report and its implications for AI-driven growth. While Nvidia’s performance exceeded expectations, skepticism regarding the sustainability of AI capital expenditure growth could weigh on the tech sector, influencing the index. Additionally, Salesforce’s disappointing sales outlook and broader concerns about the impact of AI automation on software-as-a-service companies introduce further uncertainty. Potential shifts in US sanctions policy related to Iranian nuclear talks may also impact energy producers, adding another layer of complexity to the Dow’s trajectory.
FTSE 100 experienced mixed trading, holding steady after reaching a record high. Negative pressure stemmed from underperforming WPP, which saw a sharp decline after reporting disappointing financial results and significantly reducing its dividend. Declines in several major mining stocks and a pullback in HSBC further contributed to the downward pressure. However, gains in Rolls-Royce, driven by strong earnings and a new share buyback program, and London Stock Exchange Group, boosted by shareholder return plans, provided offsetting support. The market’s subdued response to Nvidia’s results suggests that the strong technology sector performance did not significantly influence the index’s overall direction on this particular day.
DAX experienced a slight decrease, influenced by a mix of corporate earnings reports and geopolitical events. While Nvidia’s strong results provided some positive momentum, concerns about high valuations lingered. Uncertainty surrounding US-Iran nuclear talks in Geneva also contributed to investor caution. Allianz’s disappointing 2026 guidance weighed on insurer stocks, while Deutsche Telekom’s mixed outlook had a muted impact. Puma’s positive performance outside the main index offered a contrasting signal, indicating some underlying strength in specific sectors. Overall, the DAX’s performance reflects a cautious market reacting to both company-specific news and broader macroeconomic and geopolitical factors.
NIKKEI experienced a mixed trading day, reaching new record highs before paring gains in response to hawkish signals from the Bank of Japan. Statements suggesting potential future interest rate hikes and scrutiny of upcoming economic data introduced uncertainty, contributing to intraday volatility. Sector performance was varied, with gains in companies like Fujikura, Mitsui Kinzoku, and SoftBank Group offset by declines in Advantest, Disco Corp, and Tokyo Electron, indicating a market sensitive to potential shifts in monetary policy. The overall impact suggests traders are carefully weighing the possibility of tighter monetary conditions against the backdrop of a strong market uptrend.
GOLD is exhibiting a mixed outlook, influenced by several factors. Geopolitical tensions, particularly involving the US and Iran, provide underlying support as investors seek safe-haven assets. Uncertainties surrounding US trade policies and tariffs also contribute to its appeal. A weaker US dollar, driven by factors such as a rise in market optimism and shifts in Japanese monetary policy, is providing additional tailwinds. However, expectations for delayed Federal Reserve rate cuts could limit gains, as they reduce the attractiveness of non-yielding assets like gold. The outcome of US-Iran nuclear talks will be crucial; a failure to reach a deal could significantly boost gold’s value due to increased safe-haven demand.
OIL is facing downward pressure as several factors converge. The potential for increased Iranian oil supply following renewed nuclear negotiations injects uncertainty into the market. At the same time, rising exports from Saudi Arabia and other Middle Eastern producers contribute to expectations of a global supply surplus later in the year. These supply-side concerns are weighing on prices, and traders are closely watching the upcoming OPEC+ meeting for indications of future production policy and potential interventions to manage supply.