• European indices lower whilst US futures are modestly higher ahead of US NFP.
• USD misery continues as DXY dips to 103.60 as EUR's rally extends into Friday's trade.
• Bunds bounce off worst but remain over 300 ticks lower WTD, USTs await Payrolls & Powell.
• Crude firmer with gas inflating on damaged Ukrainian infrastructure.
• Looking ahead, US NFP, Canadian Jobs, White House Crypto Summit, Speakers including Fed’s Powell, Bostic, Bowman, Williams, Kugler & ECB’s Kazaks, Centeno.

TARIFFS/TRADE

• US President Trump posted on Truth "After speaking with President Sheinbaum of Mexico, I have agreed that Mexico will not be required to pay Tariffs on anything that falls under the USMCA Agreement. This Agreement is until April 2nd". It was later reported that Trump signed the amendment to Mexico and Canada tariffs to make USMCA-compliant products exempt from levies until April 2nd.
• US President Trump said most tariffs are to start April 2nd and predominant tariffs will be reciprocal, while he said steel and aluminium tariffs will not be modified. Trump cited a little short-term interruption on tariffs and said tariffs are something the US has to do. Trump said he is not even looking at the market and noted the long-term economy is very strong. Furthermore, Trump said there is no USMCA exemption for auto tariffs next month, according to Reuters.
• White House said President Trump's exemption on 25% tariffs on most goods from Canada and Mexico is not retroactive, while officials noted that some automakers think they will need to pay 25% tariffs on three days of imports.
• Canada's Finance Minister said Canada will delay the second wave of tariffs on CAD 125bln of US products until April 2nd.
• US Commerce Secretary Lutnick informed Brazilian Vice President Alckmin in a call that the US could postpone tariffs on Brazilian goods, while Alckmin believes Brazil and the US could reach a good understanding on tariffs policy through dialogue and noted the sides agreed to hold further bilateral talks in the coming days.
• US is to impose fees on any vessel entering US ports that are part of a fleet which includes vessels built or flagged in China and the US is to engage allies to impose similar measures or risk US retaliation, according to draft order.
• Chinese Foreign Minister Wang said the abuse of fentanyl is an issue that the US has to solve and noted regarding US-China relations that if one side exerts pressure, China will resolutely counter that. Furthermore, Wang Yi said China's economy grew 5% last year despite the pressure of unilateral US sanctions.
• UK Business Secretary Jonathan Reynolds vowed to ‘stand up’ for British steel as US tariffs loom, according to FT.

EUROPEAN TRADE

EQUITIES

• European bourses (STOXX 600 -0.8%) began the session entirely in the red, and continued to trundle lower in early morning trade; price action has been relatively choppy, with focus now on US NFP.
• European sectors hold a strong negative bias. Telecoms is leading today, albeit modestly so; newsflow for the industry has been light aside from EU Defence Commissioner Kubilius saying it is possible to replace Starlink in Ukraine quickly. Consumer Products is the clear underperformer today, with particular weakness in the Luxury after Chinese trade data and Ferragamo results.
• US equity futures are modestly firmer footing; the lift in sentiment today could be attributed to the strong Broadcom results; Co. shares are up 12% in pre-market trade after reporting strong AI-demand in Q1, where profits and sales topped expectations. The highlight of the day is the US jobs report for February, where the pace of payroll additions is seen at 160k (vs 143k in January), the jobless rate is seen unchanged at 4.0%, while average earnings are seen unchanged at 41% Y/Y.
• Tesla (TSLA) added to "best ideas list" at Wedbush.
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FX

• USD's miserable run for the week has extended into Friday trade. DXY started the week off around the 107.56 mark but has since ripped through its 200DMA to the downside at 104.99 and printed a YTD trough at 103.56. Ahead, US NFP and of course any updates from President Trump regarding trade.
• This week's monster rally in the EUR has continued into today's session with the pair printing a fresh YTD Peak at 1.0871. Upside this week has stemmed from the recent spending pledges coming out of Germany, a hawkish tweak to ECB guidance and an ongoing slew of soft data releases out of the US. On the ECB, source reporting in the aftermath of the decision noted that some officials see an increasing chance of a rate in April with 2.5% unlikely to be the terminal rate. Others on the GC see a growing chance of a pause in their easing cycle at their next meeting before rates come down again. Attention is now on a test of 1.09; not breached since 6th Nov.
• Overnight, USD/JPY traded on both sides of the 148.00 level before ultimately moving lower alongside the risk-off mood in APAC. In terms of domestic newsflow, source reporting via Bloomberg noted that the BoJ is reportedly leaning towards holding the key rate at the March meeting as it wishes to monitor the January hike and impact of US policies. Furthermore, it sees recent wage developments as being within expectations. The downside in USD/JPY has led to another YTD trough for the pair at 147.20.
• GBP is on the front foot vs. the USD once again and has printed another YTD peak at 1.2925. As has been the case throughout the week, fresh macro drivers for the UK have been lacking and therefore it is the USD leg of the equation that has been the primary driver for Cable. The pair has soared from the 1.2577 opening price on Monday, clearing its 200DMA at 1.2785 and made its way onto a 1.29 handle.
• Antipodeans are both bucking the trend of other majors and are on the backfoot vs. the USD. Price action takes place in the context of the risk-off mood in APAC trade and as participants digested the latest trade figures from Australia and New Zealand's largest trading partner, China which showed a surprise contraction in imports and a miss on exports.
• CAD is flat vs. the USD following a heavy day of tariff-related newsflow yesterday. To recap, Trump signed an amendment to Mexico and Canada tariffs to make USMCA-compliant products exempt from levies until April 2nd. However, there will be no USMCA exemption for auto tariffs next month, steel and aluminium tariffs will not be modified and April 2nd reciprocal tariffs will still go ahead. On net, the announcements have provided some reprieve for CAD. Ahead, the region's own jobs data.
• PBoC set USD/CNY mid-point at 7.1705 vs exp. 7.2406 (prev. 7.1692).
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FIXED INCOME

• Bunds are firmer in a modest bounce from recent significant pressure. At best, Bunds have been to a 128.18 peak with gains of 116 ticks at best. A move which is likely a modest paring of recent extensive downside and also a function of the downbeat European equity risk tone. Bunds in the morning got hit by a very soft Industrial Output report for January which printed outside of the forecast range and sparked immediate pressure of around 30 ticks in Bunds to the eventual 127.54 trough. A move which was potentially spurred by the soft Industrial data justifying the fiscal measures outlined by incoming Chancellor Merz earlier in the week.
• USTs are firmer but in a narrower 110-25 to 111-03 band. Benchmarks benefitting from the uptick in Bunds as discussed above, more sources pointing to the BoJ potentially remaining on hold in March (pricing has a 96% chance of no move implied) and mainly waiting for Payrolls & Powell. That aside, following the concessions on tariffs by Trump on Thursday we are keenly awaiting any fresh updates to this for/from Canada and Mexico in addition to and perhaps more pertinently anything relating to China.
• Gilts find themselves following suit with broader price action but caught between USTs and Bunds in terms of magnitudes. Currently back below the 92.00 mark but has been above the figure in a 91.73-92.13 band. Specifics for the region light with the initial bias a bullish one on account of the above and indeed Gilts opened higher by around 33 ticks.
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COMMODITIES

• Crude is on a firmer footing and currently trade just off session highs, with both WTI currently higher by circa USD 0.98/bbl thus far; support today lacks a clear driver, but with upside coinciding with strength at the European cash open. Brent'May currently trading at the top end of USD 69.30-70.50/bbl range. Russian Deputy PM Novak said OPEC+ is to raise oil output from April, but might reverse that decision afterwards if there are imbalances in the market. This sparked little move in the complex.
• Natgas prices began the morning softer, but jumped on news that a Russian attack “significantly” damaged Ukraine’s gas production facilities; which caused operations to cease. Dutch TTF currently higher by around 4%.
• Spot gold traded sideways overnight, but picked up a touch in European trade, fuelled by the weaker dollar, and ahead of the US NFP report. The yellow metal is firmer by 0.3%, above the USD 2900/oz mark, and within a USD 2,896.83-2,923.06/oz range on the session.
• Copper futures are subdued amid the mostly negative risk tone, with its biggest buyer, China, printing weaker-than-expected trade data.
• Russia Deputy PM Novak says OPEC+ is to raise oil output from April, but might reverse that decision afterwards if there are imbalances in the market. OPEC+ decision to raise output due to seasonal rise in demand. Oil flows via CPC are at reduced volumes after recent drone attacks, pumping will depend on production level. Russia's oil output is well below OPEC+ quota in February, will be taken into account within the deal. Russia aims to fully comply with OPEC+ deal. Says parties subject to the deal will analyse possibility to speed up compensation for previous overproduction.
• Qatar set April Marine Crude OSP at Oman/Dubai plus USD 2.10/bbl April Land Crude OSP at Oman/Dubai plus USD 1.85/bbl.
• Saudi Arabia has set the April Arab light crude oil OSP at Asia at plus USD 3.50bbl vs. Oman/Dubai average, according to documentation cited by Reuters
• UBS sees price level of USD 1000/oz for Palladium in 2025; expects a deficit of around 300k/oz, or 3% demand in 2025; expects it to remain a laggard in the precious metals space.
• China Feb Foreign reserves USD 3.227tln (exp. USD 3.229tln); gold reserves USD 208.6bln (prev. USD 296.5bln).
• Ukraine's Energy firm DTEK says Russian attack significantly damaged its gas production facilities in Ukraine's Poltava region; these facilities have ceased operations after the attack.
• Kazakhstan ships 100k T of oil to Germany via Druzhba pipeline in Feb, according to IFAX citing Kaztransoil.
• Kazakhstan Energy Minister says their oil output is above OPEC+ quotas; has tasked oil majors to cut oil production. Intend to optimise oil output in March. To cut oil export via the CPC. Consultations will be held next week in the US with the CEOs of major shareholders in big oil projects in Kazakhstan. Told major oilfield shareholders, ExxonMobil (XOM), Shell (SHEL LN), TotalEnergies (TTE FP) to cut March volumes, was received well.
• UBS sees price level of USD 1000/oz for Palladium in 2025; expects a deficit of around 300k/oz, or 3% demand in 2025; expects it to remain a laggard in the precious metals space.
• Saudi Arabia has set the April Arab light crude oil OSP at Asia at plus USD 3.50bbl vs. Oman/Dubai average, according to documentation cited by Reuters.
• Bank of America reiterates its unchanged USD 60-80/bbl medium-term forecast range for Brent.
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NOTABLE DATA RECAP

• German Industrial Orders MM (Jan) -7.0% vs. Exp. -2.8% (Prev. 6.9%)
• French Trade Balance, EUR, SA (Jan) -6.54B (Prev. -3.905B, Rev. -3.48B)
• UK Halifax House Prices YY (Feb) 2.90% vs. Exp. 3.10% (Prev. 3.00%); MM (Feb) -0.1% vs. Exp. 0.3% (Prev. 0.7%)
• EU Employment Final YY (Q4) 0.7% vs. Exp. 0.6% (Prev. 0.6%); GDP Revised YY (Q4) 1.2% vs. Exp. 0.9% (Prev. 0.9%); GDP Revised QQ (Q4) 0.2% vs. Exp. 0.1% (Prev. 0.1%); Employment Final QQ (Q4) 0.1% vs. Exp. 0.1% (Prev. 0.1%)

NOTABLE EUROPEAN HEADLINES

• EU is to explore long-term reform of fiscal rules for defence, while it was separately reported that Spanish PM Sanchez said Spain to bring forward the timeline to reach 2% of GDP defence spending.
• ECB's Villeroy says we are winning the battle with inflation; ECB must be ready to act and react.
• ECB's Muller says euro-area inflation is nearing the ECB's 2% target, via Bloomberg. Too early to assess the potential impact of US tariffs. Trade restrictions would dampen growth and increase prices. Emphasizes increased caution regarding future rate cuts.
• UK Chancellor Reeves met with primary dealer firms in the Gilt market on 6th March; reiterated a commitment to fiscal rules and that growth is the number one priority for the government.

NOTABLE US HEADLINES

• US President Trump sent a letter to Iran urging negotiations, via Fox Business; notes he paused tariffs to help Mexico and Canada; tariffs could go up as time goes by.
• Fed's Bostic (2027 voter) said the economy is in incredible flux and hard to know where things will land, while he added that if they wait for trends to show up in national economic data before acting, they could be too late. Bostic also said he would be surprised if they get a lot of clarity on the impact of policies before late spring into summer and noted the decision at the May or June meeting will depend on how clear things get. Furthermore, he said they have to be patient and it is never good for the Fed to change course from one policy meeting to the next.
• US President Trump will sign executive orders today at 14:30EST/19:30GMT and deliver remarks at the White House Digital Assets Summit at 15:00EST/20:00GMT
• US House Speaker Johnson aims to hold a CR vote on Tuesday and expects it will pass, while the CR text could be released as soon as Friday.

GEOPOLITICS

RUSSIA-UKRAINE

• Russia's Kremlin say they are closely monitoring EU defence initiatives and warn they may need to implement necessary countermeasures to safeguard Russian national securitySays Trump's call for denuclearisation is on the agenda. Dialogue with the US on arms control is essential.
• Ukrainian President Zelensky said Ukraine and the US are to have a meaningful meeting next week and that Ukraine seeks a truce for air strikes and sea operations, while he added that Russia needs to release POWs to establish trust. Zelensky also said he will meet with the Saudi Crown Prince next week, and then the Ukraine team will remain in Saudi for a meeting with US officials.

OTHER

• French President Macron said he was approached all day by other EU leaders to discuss the nuclear deterrence offer and technical talks will start on nuclear deterrence with EU leaders in which he hopes to see new cooperation by the end of the first half of 2025. Furthermore, Macron said Russia reacted the way it did to his speech because what he said is true and that Putin was piqued because they know his game, while he said he will talk with Putin once it is decided it is the right time.
• Chinese Foreign Minister Wang Yi said the international situation in 2025 remains full of challenges, while he added that China and Russia have established a new model of major-country relations and their relationship will not be disturbed by third parties. Wang also stated that Taiwan has never been a country and it never will be, as well as noted they should realise the complete 'reunification' of the motherland.

CRYPTO

• Bitcoin is on the backfoot and trading just shy of USD 89k ahead of today's US Crypto Summit, where President Trump is expected to give some remarks.

APAC TRADE

• APAC stocks were mostly lower as the region followed suit to the losses stateside amid growth concerns, tech weakness and tariff uncertainty, while participants digested Chinese trade data and braced for US jobs data.
• ASX 200 retreated below the 8,000 level with the declines led by tech following the rout in US counterparts and with the top-weighted financial sector also suffering firm losses.
• Nikkei 225 underperformed and dipped to sub-37,000 territory in early trade with weakness in tech stocks dragging the index lower, while long-term Japanese yields continued to rise.
• Hang Seng and Shanghai Comp initially bucked the trend despite the weaker-than-expected Exports and Imports data from China, while there were recent support pledges by the nation's central bank, finance and securities heads including PBoC Governor Pan who said they will study and establish new structural policy tools, as well as cut interest rates and banks’ RRR at the appropriate time. However, the benchmarks ultimately succumbed to the broader risk tone.

NOTABLE ASIA-PAC HEADLINES

• BoJ is seen keeping policy steady at this month's meeting, although three sources familiar with its thinking said inflationary pressures from wage gains and prolonged food price rises could prompt discussion of another hike as soon as May.. Thereafter, BoJ is reportedly leaning towards holding the key rate at the March meeting, via Bloomberg citing sources; wishes to monitor the January hike and impact of US policies
• South Korean court cancelled the arrest of South Korea President Yoon although Yoon's lawyer said he won't immediately be released as prosecutors can appeal, while the Presidential Office said it hopes Yoon will return to work soon.

DATA RECAP

• Chinese Trade Balance (USD)(Feb) 170.52B vs. Exp. 142.35B (Prev. 104.84B)
• Chinese Exports YY (USD)(Feb) 2.3% vs. Exp. 5.0% (Prev. 10.7%); Imports YY -8.4% vs. Exp. 1.0% (Prev. 1.0%)
• Chinese Trade Balance (CNY))(Feb) 1226.1B (Prev. 752.9B)
• Chinese Yuan-Denominated Exports (Feb) 3.0% (Prev. 10.9%); Imports (Feb) -7.3% (Prev. 1.30%)