# United States
The US dollar is currently consolidating its recent gains against the G10 currencies amidst calm and uneventful market turnover. Uncertainty continues to linger regarding the US tariffs anticipated for next week. President Trump mentioned that auto tariffs could be expected in the coming days, though he also hinted at potential exceptions. Meanwhile, a meeting between the EU’s trade representative Sefcovic and US Commerce Secretary Lutnick is taking place, and a US delegation is in India for trade discussions. The dollar shows mixed performance against emerging market currencies, with the Mexican peso strengthening by 1% against the greenback. In a significant move, the offshore yuan has been on a six-day losing streak, the longest in about 2.5 years, with the PBOC setting the dollar’s reference rate higher for four consecutive sessions, suggesting an acceptance of a weaker yuan.
In the Asia Pacific, most stock markets rose, with Indonesia stepping in to support the rupiah. However, the Hang Seng and mainland shares experienced a decline of over 2%. The Stoxx 600 in Europe aims to recover from a three-day decline, while US index futures are trimming yesterday’s gains. European 10-year government bond yields are slightly up, and the 10-year US Treasury yield is increasing for the third straight session, reaching its highest level since late February at 4.35%. Gold remains steady above $3000, while May WTI approaches $69.50 after consecutive gains. The Dollar Index, having reached almost 104.45, trades steadily within the 104.25-104.45 range, with a target of 104.90-105.00. Upcoming US economic data includes house prices, new home sales, and the Philadelphia Fed’s non-manufacturing survey, which showed a decline in business outlook last week. The Conference Board’s consumer confidence measure is expected to drop, following the University of Michigan’s sharp sentiment fall. The US’s proposal to impose a 25% tariff on imports of Venezuelan oil and gas underscores its unilateral policy direction.
# Eurozone
The euro reached a two-week low in North American trading yesterday at around $1.0780, and a further decline could target the $1.0700-25 range. After a surge in dollar selling from Europe earlier in the month due to unwinding record US equity purchases from last year, this trend has recently eased. Speculators continue to hold net long positions in the euro for the second consecutive week, with a net long position of 59.4k contracts, the highest since mid-September 2024. This week sees light eurozone data releases, though Germany’s IFO reported slight sentiment improvement, echoing earlier indications from surveys like the preliminary PMI. Germany’s business climate assessment at 86.7 is the best since last July.
# United Kingdom
Sterling traded within a narrow range yesterday after dipping last week following a rise above $1.30. Now consolidating above $1.29, the pound faces a support area around $1.2840-$1.2860. Tomorrow is pivotal for the UK, with February CPI anticipated to rise by 0.5%, though the year-over-year rate might remain steady at 3.0%. Core and services inflation may slightly decelerate. Additionally, the Office for Budget Responsibility will update its forecasts, likely acknowledging a weaker economy resulting in a larger budget deficit. Chancellor Reeves will need to address this, with the Labour government inclined toward welfare cuts over tax hikes or increased deficits.
# China
Against the offshore yuan, the dollar hit a two-week high yesterday at around CNH7.2680, leading to a potential sixth consecutive daily advance, a streak not seen since October 2022. The PBOC set the dollar’s reference rate at CNY7.1788, a multi-month high, indicating a probable policy shift. Following its annual meeting, the PBOC reiterated plans to cut rates and reserve requirements, though not imminently.
# Japan
The yen remained under pressure as US Treasury yields firmed and the US-Japan yield premium widened, with the dollar crossing JPY150. Gains extended to JPY150.95 today, marking the highest since March 3. If JPY150 holds, the next resistance is around JPY151.30. Despite softer economic data, expectations for the BOJ remain unchanged. Market focus shifts to Japan’s March Tokyo CPI, expected to soften for the second consecutive month with flat core measures.
# Canada
The Canadian dollar settled near a three-day low yesterday just below CAD1.4300, with support in the CAD1.4270-CAD1.4240 range. Currently trading narrowly between CAD1.4310-CAD1.4335, political shifts are evident as Carney steers the Liberal Party toward a pro-business stance. The Conservative leader Poilievre proposes a tax cut, promising more defense and infrastructure spending. Despite potentially larger deficits, fiscal concerns are outweighed by tensions with the US and issues of housing and healthcare affordability.
# Australia
The Australian dollar remained within Friday’s range, trading between $0.6280-$0.6295 today. Encountering resistance above $0.6300, a break below $0.6260 might prompt a revisit to the month’s low near $0.6200. Australia’s February CPI, expected to remain flat at 2.5%, won’t likely lead to a rate cut next week, given the central bank’s focus on quarterly data with the Q1 report due in late April. Market expectations imply a possible rate cut at the May 20 meeting.
# Mexico
The Mexican peso strengthened by about 1% yesterday, recovering from last week’s substantial decline. The peso’s resilience, despite the dollar’s broader strength and softer-than-expected CPI and economic data, reduces debate about a 50 basis point rate cut later this week. Meanwhile, the Brazilian real ended below BRL5.7650, with resistance between BRL5.7750 and BRL5.8100.
