## United States
At the end of last week, much attention was on the potential for a “Black Monday,” and it appears those warnings have materialized. Various circuit breakers have been triggered as stock markets nosedive. U.S. index futures suggest a third consecutive lower opening, a technical sign of capitulation. The bond market has seen increased demand, pushing down yields, with the 10-year U.S. Treasury yield slipping by five basis points to just below 3.95%. The U.S. dollar is experiencing choppy trading sessions, with safe-haven currencies like the Swiss franc and Japanese yen outperforming, while risk-associated currencies are under pressure. Market concerns are heavily skewed towards economic direction rather than inflation. The Dollar Index, which previously hit lows not seen since October, now aims to consolidate, with initial potential around the 103.35 area. The market is closely watching the implications of U.S. tariff increases, which are considerable, surpassing past benchmarks like Smoot-Hawley. February consumer credit is due today, but the looming CPI report on Thursday is expected to show minor softening in year-over-year inflation rates.
## Eurozone
Following a surge to nearly $1.1145 due to U.S. tariff announcements, the euro has retraced some gains, falling closer to $1.0880, with support seen near $1.0850. Retail sales in the Eurozone have posted their first monthly increase since last September, signaling a potential recovery. However, German industrial production declined by 1.3% after a previous 2% gain, in contrast with France and Spain, which reported positive industrial production figures. The overall sentiment is mixed, with the Eurozone anticipating the ECB meeting on April 15. Expectations for a rate cut at the upcoming ECB meeting have increased due to U.S. tariffs and euro appreciation.
## United Kingdom
Sterling recently settled around $1.2865, its lowest in a month, after peaking near $1.3200 not long ago. Further losses are testing a range between $1.2785 and $1.2800. Given the current strength of sterling and the impact of U.S. tariffs, markets are pricing in an increased likelihood of a rate cut at the next Bank of England meeting. Market expectations for rate cuts by the end of the year have also increased markedly.
## China
The U.S. dollar is testing the upper boundary for this year’s range near CNH7.37 against the yuan, following last week’s moves below CNH7.25. The People’s Bank of China set the dollar’s reference rate higher, signaling acceptance of further yuan weakness. In response to U.S. tariffs, China has retaliated with its own tariffs and bans on U.S. goods. The economic outlook remains sensitive to ongoing tariff developments and sectoral vulnerabilities.
## Japan
Despite U.S. bond yields remaining below 4.0%, the dollar has rebounded against the yen, trading choppily within a range set before the weekend. Japanese labor cash earnings showed a slight year-over-year increase, but inflation-adjusted wages remain in negative territory. Recent U.S. tariffs have diminished expectations of a Bank of Japan rate hike at its upcoming meeting.
## Canada
The Canadian dollar has been under pressure, with the U.S. dollar reaching new highs near CAD1.4270. The Bank of Canada will release Q1 business surveys, as other reports indicate declining sentiment. With the BoC meeting approaching, market participants are estimating a greater than 70% chance of a rate cut, up from expectations a week ago.
## Australia
The Australian and New Zealand dollars have plummeted, with the Aussie falling through the $0.6000 mark for the first time since early in the pandemic. Despite some stabilization, significant challenges remain. Australia has an uneventful economic calendar this week, with next week’s central bank meeting minutes and employment report likely to be crucial. In New Zealand, a central bank rate cut is anticipated, with the Kiwi dollar experiencing slightly less severe losses compared to the Aussie.
## Mexico
The Mexican peso has been weak, with the U.S. dollar setting new highs around MXN20.81. Mexico’s March CPI data, due Thursday, will be closely monitored. While a rate cut is expected at upcoming Banco de México meetings, upcoming CPI and GDP figures will provide a clearer picture of the impact of U.S. tariffs on Mexico.
