# United States
The recent trend of a declining U.S. dollar appears to have paused, as preliminary technical indicators suggest a potential bottom forming. The uncertainty surrounding U.S. reciprocal and sector tariff announcements on April 2 is causing unease among policymakers, investors, and businesses. Currently, the dollar is stronger and is trading near the week’s peak against most major currencies. Emerging market currencies are experiencing mixed results, with the Turkish lira under pressure, down around 0.5% today and 3.75% this week amid political tensions. Equity markets are also pressured as the weekend approaches, erasing previous gains in several bourses, with U.S. index futures trading lower. In contrast, European 10-year rates saw a slight decline, while UK Gilts rose slightly. Meanwhile, the U.S. 10-year Treasury yield stands at approximately 4.22%.
Gold is stabilizing after reaching a record high near $3057.50 yesterday, now around $3029. May WTI crude hit a new monthly high at $68.65 but has since declined. The dollar’s previous downtrend dating back to around a week before President Trump’s inauguration seems long-lived but intact. Nonetheless, any close above the 104.00 level might pave the path to a 104.90-105.00 range. The potential implementation of tariffs comes at a time when next week’s economic data points, particularly the PCE deflator, are anticipated, with both headline and core rates projected to rise by 0.3%.
# Eurozone
The euro continued its decline, touching an eight-day low yesterday near $1.0815. It hasn’t dipped below $1.08 in two weeks, but a pullback seems underway, targeting the $1.0700-$1.0725 range. Important moving averages converge with the (38.2%) retracement of this month’s rally at this level. This week has been eventful for the Eurozone, with Germany approving a 500 billion euro infrastructure program after years of limited public investment, excluding defense spending from its debt cap. With upcoming preliminary PMI data and an EU summit, attention shifts to the European Commission’s proposed relaxation of fiscal restraints. Notably, Germany and the Netherlands have resisted another round of joint bonds.
# United Kingdom
Sterling encountered a neutralizing technical signal after trading within Wednesday’s range. Despite attempts, it hasn’t exceeded $1.3010-15 and hasn’t fallen below $1.29 this month. The week’s low was set at $1.2915 on Monday, with the current low around $1.2920. A downside breakout from this consolidation could be imminent. The UK’s public finance data received only minor attention, as focus shifts to next week’s update by the Office for Budget Responsibility and Chancellor Reeves Spring Statement. Domestic policies, such as foreign aid redirection to defense, have stirred debate. Upcoming economic reports include February’s CPI, retail sales, and delayed January trade figures.
# China
The dollar showed modest gains against the offshore yuan, nearing resistance around CNH7.27. Despite trading at weekly highs near CNY7.2565, China’s economic landscape remains challenging post-pandemic, with a reported growth of 5.4% in 2023 and slower forecasts for this year. Amid Beijing’s policy moves, complexities like potential port sales to Hong Kong and BYD’s planned factory in Mexico also come into play, raising geopolitical considerations about overreliance on U.S. proximity.
# Japan
The Japanese yen saw the dollar reach a low for the week just below JPY148.20. The retracement tendency from the March 11 low remains overshot near JPY146.55. Recovery in the 10-year U.S. yield from its low of 4.17% likely stabilized the yen-dollar exchange rate. Momentum indicators suggest another potential run at JPY150, which hasn’t been achieved this month. Although Japan’s CPI data elicited little reaction, next week’s Tokyo CPI report may provide more insights into inflation trends.
# Canada
The U.S. dollar hit a weekly high above CAD1.4400 before settling around CAD1.4315 after paring gains. The currency displayed a large consolidation triangle, with trading currently between CAD1.4275 to CAD1.4400. Canadian retail sales figures reveal a post-holiday downturn, albeit indicating limited impact on Bank of Canada’s policy due to more pressing issues like impending tariffs. Next week’s economic schedule includes January’s GDP, yet politics may dominate, as signs point to upcoming election announcements amid uncertain poll standings.
# Australia
The Australian dollar began the week near $0.6400 but fell to $0.6270 following greenback gains and disappointing employment results. Despite challenges, it managed to stay above last week’s low. Since Trump’s inauguration, it’s largely been within a $0.6200-$0.6400 range. Upcoming events include March’s PMI and February’s CPI, although cyclone disruptions might cast a shadow over data insights, with market expectations leaning towards future rate cuts.
# Mexico
The dollar climbed to a week-long high of around MXN20.27 amid U.S. dollar recovery and broader emerging market currency weakness. Other Latam currencies experienced similar declines, further compounded by market jitters ahead of Mexico’s anticipated rate cut. The economic outlook suggests potential headwinds from U.S. tariffs, yet the central bank’s focus will be highlighted next week as it adjusts rates. Also, crucial economic indicators like January IGAE and retail sales are due, revealing more about the fiscal landscape and policy-setting climate.
