### United States
The postponement of US reciprocal tariffs and the clarification that popular consumer products, notably from China, are not included in these tariffs until a decision is made regarding semiconductor chips, have brought some stability to the market. President Trump has also hinted at delaying the auto tariffs initially set for May 3. This has provided a much-needed reprieve for investors, resulting in the dollar mostly consolidating within its pre-weekend range and equities stabilizing. In the currency market, the dollar index has seen a modest consolidation, still trading quietly within a narrow band. The United States has threatened sectoral tariffs on semiconductors and pharmaceuticals (possibly lumber and dairy as well). However, President Trump’s consideration to delay the 25% tariffs on autos and parts suggests an acknowledgment of the pressure these tariffs place on US stocks and bonds. It is likely that the US trade policy changes will face opposition from Congress, which has the constitutional power to regulate commerce. While today’s New York Fed manufacturing survey and export/import prices releases may not typically move markets, the continuation of tariffs remains a crucial issue.
### Eurozone
The euro hit a stall after a 3.7% rise over two previous sessions and is currently trading within yesterday’s range. Maintaining levels above $1.1250 looks constructive for the euro, but a break below might initially target $1.1180. The industrial production in the Eurozone exceeded expectations, rising by 1.1% in February. Nonetheless, investor sentiment has been shaky, with the ZEW survey showing its first decline in expectations in three months, attributed, in part, to US tariffs. Germany’s DAX index might have been impacted, though the current assessment shows some improvement.
### United Kingdom
Sterling demonstrated notable strength recently, testing the $1.32 area and eventually marking a new high. While it reached $1.3240, intraday momentum has placed pressure ahead of the North American market open. Short covering against the euro is believed to have contributed to this strength. Despite expected data releases such as employment reports or inflation data, market views solidly predict a likely rate cut by the Bank of England at the May 8 meeting. Earnings growth remains slightly above MPC preferences, but continued stagflation presents an opportunity for the Bank of England to adjust rates.
### China
The dollar bounced back against the offshore yuan after initially losing ground. For now, the yuan is consolidating. With respect to tariffs, China continues observing the US’s evolving trade policies. The US has slightly reduced its share of exports to China, now at around 15%. There’s also a significant move in policy for China, transitioning emphasis from “reform and opening up” to “self-reliance and hard work.” Adding to the tensions, China has halted Boeing deliveries, hinting at broader retaliatory measures. China’s economic forecast remains steady with anticipated growth around 5% this year.
### Japan
The dollar has been fluctuating within tight bounds against the yen. The recent fall in the US 10-year Treasury yield could see the dollar becoming vulnerable and possibly moving toward JPY140.00-JPY140.50. Domestically, Japan is grappling with slowing economic growth, with expectations of modest GDP growth in upcoming quarters. Meanwhile, the Japanese central bank is not expected to tighten monetary policies extensively, signaling room for economic maneuvering.
### Canada
Canada’s currency markets indicate a slight softening of the greenback against the Canadian dollar, which threatens to extend this slump further. Although March housing starts and existing home sales data are scheduled for release, the primary focus is on the Consumer Price Index (CPI). A strong reading is anticipated, potentially encouraging the Bank of Canada to hold its stance, with the political context of next week’s elections framing expectations. Overall, the Canadian economy faces a mixed trajectory with inflationary pressures alongside electoral considerations.
### Australia
Australia’s currency has recovered significantly, drawing attention with its 7.25% rally. It’s nearing a level not reached since last December and is benefitting from favorable momentum indicators. While a rate cut next month after the election is anticipated, it likely won’t be substantial. Australia’s trade negotiations with the US are seen positively, although further economic insights will surface with the upcoming Q1 CPI report.
### Mexico
In Mexico, the peso has shown renewed strength against the dollar, nearing a significant level. This follows a prior two-month high, with further appreciation potentially signaling a move toward a five-month low recorded earlier. The peso’s stability in recent days reflects broader emerging market currencies’ trends amid a globally shifting economic landscape.
