Equities, Cryptos and Metals Under Pressure as Risk-Off Builds, Dollar Finds Uneven Support

Risk aversion intensified overnight, with US equities posting broad-based losses. DOW and S&P 500 both closed more than 1.2% lower, while NASDAQ underperformed again, sliding nearly 1.6%. Notably, S&P 500’s break below near-term support zone around 6800 is technically significant. It suggests the tech-led selloff may be spilling over into more traditional sectors, raising the risk of broader equity de-risking.

Risk-off dynamics were also evident in cryptocurrencies. Bitcoin briefly plunged through 60k level before stabilizing, marking a 50% loss from its October peak near 126k and reinforcing the sense of fragile sentiment in speculative assets. Precious metals told a similar story. Silver breached the 64 level before recovering modestly, a sharp contrast to last week’s record near 121. Gold proved more resilient but continued to struggle below 5,000 and remained well under its recent peak around 5,600.

In FX markets, Dollar is the strongest performer for the week so far, though gains against Euro remain unconvincing. The greenback is being pulled by opposing forces, with risk aversion offering support while shifting rate expectations cap upside. Fed funds futures are now pricing more than 20% chance of a March rate cut. While a hold remains the base case, a deeper and more persistent equity selloff could prompt some Fed officials to reassess the balance of risks.

Australian Dollar continues to defy the risk-off tone and ranks as the second-strongest currency this week. Support comes from the RBA’s hawkish rate hike this week, with some economists already flagging the possibility of another increase as early as May to contain resurging inflation pressures.

At the other end of the spectrum, Yen remains the weakest major, failing to benefit from risk aversion as traders position for a strong election win by Prime Minister Sanae Takaichi and the LDP this weekend. Sterling follows closely after the BoE’s dovish hold revived March cut expectations.

In Asia, at the time of writing, Nikkie is up 0.24%. Hong Kong HSI is down -1.30%. China Shanghai SSE is up 0.19%. Singapore Strait Times is down -0.90%. Japan 10-year JGB yield is up 0.002 at 2.231. Overnight, DOW fell -1.20%. S&P 500 fell -1.23%. NASDAQ fell -1.59%. 10-year yield fell -0.065 to 4.210.

BoJ’s Masu backs further hikes, flags weak Yen risks but urges caution

BoJ board member Kazuyuki Masu said further interest rate hikes will be needed to complete Japan’s monetary policy normalization. He noted that underlying inflation remains below 2% but is “drawing very close” to that level as firms and households gradually shed entrenched deflationary behavior.

He cautioned, however, that the Yen’s recent weakness could amplify price pressures by lifting inflation expectations, with potential spillovers into underlying inflation. Also, He highlighted processed food prices as a key area to watch, noting that surging rice prices may have made consumers more receptive to broader food price increases.

At the same time, Masu stressed the need for caution. “it is critical to ensure excessive rate hikes do not disrupt the virtuous cycle of a moderate rise in prices and wages that has finally begun to gain momentum in Japan,” he said.

RBA’s Bullock defends rate hike, cites excess demand and capacity strain

RBA Governor Michele Bullock told the House of Representatives economics committee today that the decision to raise the cash rate by 25bps to 3.85% was driven by a clear resurgence in inflation pressures during the second half of 2025.

Bullock said the Board concluded that demand in the economy had proven stronger than expected, running ahead of the supply side’s capacity to respond. As a result, inflation outcomes indicated a larger degree of “excess demand” than previously assumed.

She emphasized that this imbalance means demand growth must be dampened unless productivity and supply expand at a faster pace. With the economy now judged to be “more capacity constrained”, leaving policy unchanged would risk inflation remaining elevated for longer. On that basis, the RBA determined that tighter monetary policy was required.

BoC’s Macklem sees modest growth as economy adjusts to structural shifts

In a speech overnight, BoC Governor Tiff Macklem said Canada is undergoing profound structural change, driven by the end of open trade with the US, rapid advances in artificial intelligence, and slower population growth due to aging and lower immigration. These forces, he said, are reshaping the economy in ways that will have lasting implications.

Macklem cautioned that when structural change accelerates, disruption is inevitable. While such transitions can strengthen the economy over time, they also heighten uncertainty for businesses and households, as the full effects are difficult to predict and unevenly distributed.

Against that backdrop, the BoC expects modest economic growth over the next couple of years, with inflation staying close to the 2% target. Part of the softness reflects temporary weakness from the trade conflict, but the outlook also incorporates the adjustment costs associated with deeper structural shifts.

Monetary policy, Macklem emphasized, “will not be at the centre” of managing this transition. Instead, the BoC will play a supporting role by anchoring inflation and helping the economy navigate a period of elevated uncertainty, while remaining alert to risks and prepared to adjust policy if the outlook changes.

USD/CAD Daily Outlook

Daily Pivots: (S1) 1.3673; (P) 1.3693; (R1) 1.3733; More…

Intraday bias in USD/CAD is back on the upside as rebound from 1.3480 is resuming for 55 D EMA (now at 1.3788). Strong resistance could be seen there to complete the corrective bounce. On the downside, below 1.3625 support will bring retest of 1.3480 low. Firm break there will resume larger fall to 61.8% projection of 1.4791 to 1.3538 from 1.4139 at 1.3365. However, sustained trading above 55 D EMA will raise the chance of near term bullish reversal, and target 1.3927 resistance for confirmation.

In the bigger picture, price actions from 1.4791 are seen as a corrective pattern to the whole up trend from 1.2005 (2021 low). Deeper fall could be seen as the pattern extends, and break of 1.3538 will target 61.8% retracement of 1.2005 to 1.4791 at 1.3069. For now, medium term outlook will be neutral at best, until there are signs that the correction has completed, or that a bearish trend reversal is confirmed.