The net long position of the US dollar index approaches the zero axis, and falling below may cause a "catastrophe"

Asian Market Review

Last Friday, the US dollar index recorded a weekly increase for the first time this month, and as of now, the US dollar is quoted at 104.06.

Feder Gulsby: When facing a lot of uncertainty, you must wait for the situation to be clear.

Federal Williams: The current moderately restrictive monetary policy is "completely appropriate."

Federal Governor Waller: I tend to continue the current balance sheet shrinking rate. As we gradually approach sufficient reserve levels, it will be appropriate to slow down or stop reducing holdings.

The Federal Reserve lost $77.6 billion, the second consecutive year that it suffered a huge loss.

Trump will conduct intensive "private visits" to US military bases in Greenland.

Source: The White House begins reviewing the second round of large-scale layoffs for federal agencies.

The Canadian Prime Minister announced the early federal election, with the voting date on April 28. South Korea Financial Services avatradescn.committee: South Korea will fully resume short-selling trading as planned starting from March 31.

Turkish stock market is banned from shorting for one month; the Turkish central bank issues liquid notes to support the lira, and the bill auction will begin on March 24.

Summary of institutional views

Nomura Securities: It is right to short the yen crossover

Nomura Securities Global ForexFour members of the strategy division said in a recent research note that in the current environment, cross-trading positions in the yen may offer more attractive trading opportunities. The short position of the Swiss franc/yen "looks particularly attractive, especially now that it finally offers a positive spread as the SNB's policy rate is now lower than the Bank of Japan". Additionally, Nomura Securities continues to recommend shorting GBP/JPY as it looks difficult for the UK to launch a similar fiscal plan to Germany, meaning it is unlikely that the UK will announce large-scale fiscal spending in next week's spring budget.

Dansker Bank: The Federal Reserve may send a signal that policy shifts are...

In the first few months of 2025, the U.S. consumer confidence index has deteriorated significantly, and business economic indexes in the services industry and other fields have also continued to weaken. Under the avatradescn.combined effect of these factors, the uncertainty of the U.S. economic growth prospects have been exacerbated. Although we do not believe that the U.S. economy is about to fall into a deep recession environment, the rising risk of recession may affect the Fed's policy choices in the avatradescn.coming months, especially if the labor market continues to be weak and resonates with the negative signals released by the current consumer side, it may significantly change the Fed's monetary policy decision-making path.

Facefield Bank: Germany's fiscal expansion carnival has begun, leaving little room for the ECB to cut interest rates?

The German Bundestag has approved the fiscal package reached by the CDU, the SPD and the Green Party last week, releasing fiscal space by substantively suspending the "debt brake" rules. In light of the assumption that the United States is about to impose a 10% tariff on Europe, we have raised Germany's annual economic growth forecast for 2026-2028 by 0.3%-0.5% per year. However, this benchmark forecast is still highly uncertain and many policy details still need to be clarified. It is worth noting that our prediction model has not yet fully included the possible new expenditure items predicted in 2025. Judging by the freed fiscal space - such as allowing expenditure projects such as military aid to break through budget constraints - this year's additional expenditure may easily reach 0.5%-1% of GDP, depending on the progress of the coalition government negotiations. At this stage, the cooperation trend among parties is better than expected, but the game around fiscal spending is expected to intensify in the next few years: the CDU advocates achieving fiscal discipline by cutting spending, improving efficiency and simplifying administrative processes, while the SPD strives to raise the minimum wage standard, extending parenting holidays, and raising the tax rates for income groups and capital gains. As for the 2025 budget, the two factions may reach a avatradescn.compromise to a certain extent. It is expected that policies with higher costs such as corporate tax reductions and electricity price subsidies may be introduced simultaneously, and minimum wage standards will be increased.

This policy avatradescn.combination undoubtedly triggersThe market's in-depth thinking on short-term confidence in Germany's economic growth, wage levels and inflation changes. In our forecast, the weakening of the inflation avatradescn.compensation effect in wage negotiations coupled with the acceleration of economic growth may suppress the rise in unit labor costs in the short term; but the expansion of the positive output gap brought about by the continued tight labor market may push up Germany's medium-term inflation risks. This avatradescn.complex situation puts the ECB in a monetary policy dilemma: although the short-term basic inflation pressure tends to ease, the medium-term inflation pressure has appeared, which will significantly restrict the extent of its release of interest rate cut policy space.

Goldman Sachs: UK's CPI may fall across the board in February, but the overall CPI may be higher than the Bank of England's expectations

The UK's February CPI data released next week shows that service industry inflation will fall from 5.01% in January to 4.9%, 17 basis points lower than the Bank of England's benchmark forecast. The decline in this indicator may drive core inflation to fall slightly from 3.74% to 3.69%. Although road fuel prices have risen continuously recently, the annual rate of energy prices is expected to fall slightly due to the influence of the base effect. However, driven by factors such as adjustments in alcohol consumption tax, the increase in food, alcohol and tobacco prices may further accelerate from 3.71% to 3.98%. Overall, our forecasting model shows that the overall CPI will remain at 2.97%, 12 basis points higher than the Bank of England’s forecast.

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