Edward Hayden-Briffett
Research Analyst, Flux
ZEW Economic Sentiment, Eurozone Inflation Confirmed Softer
ZEW sentiment plunges; Fed seen on hold, dollar eases, inflation stays subdued, and Chinese firms boost FX hedging amid yuan strength.
Atrocious ZEW Economic Sentiment in Germany and Euro Area, at -0.5 and -8.5, respectively, the lowest since April 2025. Both massively underperformed expectations as the Middle East war seriously damages optimism.
ADP showed 9k jobs added per week on average in February. Dollar rally beginning to fade this week, DXY dropped from high of 100.5 on Friday to 99.5 today, showing some consolidation in today’s session so far. OIS now pricing only 27 bps of cuts by the Fed by year-end, no cut expected at today’s FOMC – not until December meeting.
Eurozone inflation was confirmed softer in the final February release, but the market impact should be limited given consensus was already anchored to the flash print. Headline CPI held at 1.9% y/y, core at 2.4% y/y, and monthly inflation at 0.6%. Inflation remains relatively subdued and continues to sit close to target.
Chinese firms are ramping up FX hedging as yuan strength pressures exporters, with net outstanding forward contracts hitting a record $107bn at end-February (highest since 2010). USD/CNY has strengthened toward 6.90, though positioning leaves firms exposed if the dollar rebounds amid rising volatility.
Data today: FOMC, US PPI, Factory orders.
Written by
More News
Brent Rises to $103.92/bbl
Cambodia faces fuel shortages as imports shift; US plans SPR swap release with firms returning oil at premiums.
4 page report
Mind the (Sweet v Sour) Gap
The past week saw continued physical support in Dubai crude, with the Balmo Dubai spread rallying from $27/bbl to flirt with $50/bbl w/w....
Power Nap
Midland flows dominate; early bearish trades give way to buying interest, lifting differentials as physical market strength builds.
Brent Rangebound at $102/bbl
Donald Trump criticizes allies as Iran tensions escalate, tanker hit near Port of Fujairah and investment retreats.
4 page report