Dollar dominates markets

Asia-Pacific Markets

Asian markets tumbled on Friday as renewed tariff concerns rattled investor sentiment. Former U.S. President Donald Trump reaffirmed his plans to impose a 25% tariff on imports from Mexico and Canada starting March 4, alongside a fresh 10% duty on Chinese goods. With China’s National People's Congress set to convene next week, expectations are growing for additional stimulus measures to counteract trade pressures.

Japan's economic data signaled further weakness. Housing starts contracted 4.6% YoY in January, marking the fastest decline since August and extending a nine-month downturn. Meanwhile, Tokyo’s core CPI rose 2.2% YoY in February, slowing from the previous month's 2.5% but still above the Bank of Japan’s 2% target, keeping policy speculation in focus.

Currencies

Trade-sensitive currencies also took a hit, with the Australian dollar down, reflecting heightened concerns over global trade flows.

The U.S. dollar strengthened, supported by investor caution ahead of the PCE inflation release—a key indicator for the Federal Reserve’s policy outlook.

While most Asian currencies extended losses, the Japanese yen bucked the trend, rising 0.2% to 149.60 per dollar, bolstered by Tokyo’s inflation data and expectations of a Bank of Japan rate adjustment.

Commodities

Oil prices edged lower in early trading as tariff uncertainty and global growth concerns outweighed supply risks.

• Brent crude slipped 0.4% to $73.30 per barrel
• WTI crude dropped 0.4% to $69.70 per barrel

Both benchmarks are on track for their first monthly decline since November, as markets weigh potential demand headwinds against geopolitical supply risks, including U.S. sanctions on Venezuela and Iran’s ongoing confrontation with Western nations. OPEC+ remains in discussions about whether to proceed with a planned production increase in April.

European Markets

As trading shifted to Europe, focus turned to economic data releases:

• Germany’s retail sales surged 3.5% MoM in January, far exceeding expectations of 1.7%, and rebounding from the previous 1.8% increase.
• On an annual basis, German retail sales eked out a 0.2% YoY gain, a sharp turnaround from the previous 1.6% contraction.

Despite the stronger-than-expected retail data, the EUR/USD pair remained under pressure, trading below 1.0400 as heightened safe-haven demand lifted the U.S. dollar. Investors are also looking ahead to German inflation figures and U.S. PCE data, both of which could shape market expectations for central bank policy in the months ahead.