Forex Briefing (WN09 2026): MACRO DIVERGENCE DICTATES CURRENCY DOMINANCE
The market mood is intensely risk-averse, driven by the sudden escalation of United States trade protectionism. High-yielding currencies are actively stripping capital away from export-dependent natio
🔥 The USD and GBP are crushing it while the CAD and JPY crumble under tariff fears! 📉
The market mood is intensely risk-averse, driven by the sudden escalation of United States trade protectionism. High-yielding currencies are actively stripping capital away from export-dependent nations right now.
This structural divergence will likely intensify. As the reality of 15 percent global tariffs sets in, the JPY and CAD face mounting pressure against the resilient USD and GBP.
Today, markets digest the tariff shocks and traders will monitor retaliatory trade rhetoric.
WHAT TO WATCH
USD/CAD: Highly Convincing Bullish Sentiment Over The Coming 7 Weeks Due To Protectionism
Over the past 7 weeks, the USD/CAD pair experienced highly convincing upside support as the USD capitalized on sticky United States inflation and safe-haven inflows. The Federal Reserve’s pause at 3.50 to 3.75 percent, driven by a 3.0 percent year-on-year Personal Consumption Expenditures print, created a massive yield advantage. Meanwhile, Canada’s economy stalled with housing starts plunging 15 percent, forcing the Bank of Canada to hold at a dovish 2.25 percent. Looking forward, highly convincing bullish sentiment will dominate the pair. The new 15 percent global tariffs imposed by the United States present a dire threat to Canadian exports. This structural vulnerability, combined with widening yield gaps, will drive relentless capital rotation from the CAD into the USD (https://www.bea.gov). Recent events saw the United States Producer Price Index print flat, while Canadian January retail sales flashed a 1.5 percent rebound, offering brief CAD relief. However, the United States Personal Consumption Expenditures index spiked 0.4 percent month-on-month, triggering aggressive USD buying.
GBP/JPY: Highly Convincing Bullish Sentiment Over The Coming 7 Weeks Due To Economic Exceptionalism
During the previous 7 weeks, the GBP/JPY cross saw highly convincing upside support. The GBP thrived on domestic strength, highlighted by a 1.8 percent jump in January retail sales and a hawkish Bank of England holding rates at 3.75 percent. In contrast, the JPY collapsed past 158.70 against the USD. Despite a Bank of Japan hike to 0.75 percent, the Yen was ravaged by fears over Prime Minister Takaichi’s fiscal expansion and the devastating 15 percent United States tariffs. Moving forward, highly convincing bullish sentiment will persist for GBP/JPY. The United Kingdom’s Composite Purchasing Managers Index soaring to 53.9 confirms an economic breakout, ensuring yields remain high. Japan’s export-reliant economy, however, faces severe margin compression from United States protectionism, rendering the JPY structurally weak (https://www.ons.gov.uk). Recently, the United Kingdom unemployment rate ticked up to 5.20 percent, but the massive retail sales beat overpowered the negativity. Japan’s core inflation hit 2.00 percent, yet the Yen depreciated due to underlying weakness. Traders are now intensely focused on the final United Kingdom Services Purchasing Managers Index on March 4, followed by critical monetary policy decisions from both the Bank of England and the Bank of Japan scheduled for March 19.
Gavin Pearson has been studying the currency markets as a retail trader for twenty years.
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