### United States
The US dollar has strengthened today, gaining ground against all G10 currencies. This rise is attributed to reports of potential policy changes by President Trump, who on the 100th day of his second term, may announce adjustments such as postponing tariffs on imported auto parts used in US-made vehicles, while also exempting automakers from aluminum and steel tariffs. Despite the Canadian dollar performing somewhat well due to a Liberal victory, it remains hampered by its minority government status. The Japanese yen and Swiss franc have depreciated by about 0.5%-0.6%, reflecting a more stable tone in capital markets.
Emerging market currencies display mixed performance. Several from the Asia-Pacific region, like the yuan, are strengthening, whereas central European currencies show a downward trend. In equities, most markets are performing well today, though China and Singapore are lagging behind, continuing a trend from yesterday. Europe’s Stoxx 600 is on an upward trajectory for the sixth session in a row, while US index futures are building on the previous day’s recovery.
European benchmark 10-year yields have decreased by 1-2 basis points, despite stronger inflation expectations from an ECB survey. In the US, the 10-year Treasury yield has slightly increased, sitting at around 4.23%. Gold prices have retraced yesterday’s gains but remain within a range, managing to hold above $3300 after forming a base around $3260-$3265 last week. June WTI crude prices have dipped, reaching an eight-day low below $61, with chart support observed near $60.
The Dollar Index fell to a three-day low in North America yesterday, dipping just below 98.95. However, for four consecutive sessions, it has stayed within last Wednesday’s range, which saw a low near 98.85—a three-year low. Speculation around modifications to the auto/auto parts tariff is helping stabilize the greenback today. The Dollar Index is consolidating and peaked at around 99.30, needing a rise above 100.00 to signify any major technical move.
Today’s economic data includes the March goods trade deficit, house prices, the Conference Board’s consumer confidence measure, and the JOLTS report. The market is already aware of softer survey data. Both Fed Chair Powell and Treasury Secretary Bessent have noted this but also mentioned that the real sector is doing relatively better. Expectations for growth in Q1 suggest near stagnation, and job growth may have slowed from 228k in March to around 130k. Container shipment disruptions from China to the US are progressively significant, affecting West Coast ports and anticipated to impact the Midwest shortly, and the East Coast within about 10 days. US inventory data, due to be released today, might underreport the extent of stockpiling, with reports suggesting similar accumulation in Canada.
### Eurozone
The euro had climbed above $1.1400 in North America yesterday, reaching $1.1425 before pulling back today to find support near $1.1375. It remains within last Wednesday’s range (~$1.1310-$1.1440). With current momentum indicators, some consolidation or corrective action was anticipated. Eurozone confidence figures are slightly down but not experiencing the steep declines seen in the US. The ECB survey showed an uptick in inflation expectations, yet the swaps market has nearly fully priced in a quarter-point rate cut for the June meeting. Tomorrow’s data is expected to reveal that despite declarations of Europe being uninvestible by the World Economic Forum, the eurozone outpaced US growth in Q1 for the first time in nearly three years. EMU growth, at about 0.2% quarter-over-quarter, remains modest. Spain reported a 0.6% GDP and an equivalent rise in the harmonized April CPI, maintaining the year-over-year rate at 2.2%.
### United Kingdom
Yesterday, sterling gained roughly a cent against the dollar, marking its largest increase in two weeks. It advanced to $1.3445, setting a new high for the year and surpassing last year’s peak. Today, it trades within a narrow range, finding support slightly below $1.3400. Sterling’s strength was bolstered by its ongoing recovery from losses earlier this month against the euro, which has fallen to a three-week low under GBP0.8500. A bearish outside down day was recorded by the euro, moving on both sides of the pre-weekend range and closing below Friday’s low (~GBP0.8510). Although downward momentum appears to be stalling, reaching about GBP0.8455 today, a lack of significant economic data in the coming days shifts focus to the May Day local elections, where the performance of the Reform Party could be pivotal. The Tories have significant risks, especially after their worst parliamentary defeat last year, contrasting with the strong performance tied to Boris Johnson during the last 2021 election.
### China
In the foreign exchange market, the dollar retreated from CNH7.30 yesterday, falling to approximately CNH7.2830 and extending today to CNH7.2565, a three-and-a-half-week low. It has not closed below CNH7.25 since mid-March. Meanwhile, the PBOC has made more significant adjustments to the daily reference rate than usual, setting it at CNY7.2029 today, marking the fourth consecutive session of lower rates— the longest streak in two months. Beijing has signaled greater loan support for exporters, but while it indicates intentions to boost domestic demand, it seems in no rush to announce additional stimulus. Furthermore, officials continue to refute claims by President Trump regarding ongoing trade negotiations. Estimates suggest a 40%-60% reduction in container shipments to the US.
### Japan
The dollar reversed its pre-weekend gains against the yen, dropping to roughly JPY142.00, a three-day low. Last week’s low was just below JPY139.90, the weakest position for the greenback since September (~JPY139.60). The 200-day moving average stands around JPY138.20. Today, the dollar has stabilized, recovering to JPY142.70. Breaking last week’s high near JPY144.00 is necessary to improve the technical outlook. Japan’s top foreign exchange official, Ministry of Finance’s Mimura, denied news reports asserting that US Treasury Secretary Bessent favored a stronger yen. US officials indicated a preference for a weaker dollar, aligning with efforts to revert the US corporate growth strategy to export-oriented methods instead of focusing on direct investment. Japan’s economic calendar is set to become busier tomorrow, with expected weak data on March retail sales and industrial production. The anticipated 0.4% decline in industrial production follows a significant 2.3% rise in February, which corrected a prior cumulative decline exceeding 3% over the preceding three months. Retail sales are projected to drop by 0.7% according to median forecasts, following a 0.4% rise in February and a 1.2% increase in January. The world’s third-largest economy likely stagnated in Q1 25 after expanding by 2.2% annually in Q4 24.
### Canada
The US dollar traded within the CAD1.3815-CAD1.3900 range yesterday, staying in the same corridor established mid-last week (~CAD1.38-CAD1.39). Today, it stretched the range narrowly but remained just above CAD1.3800. After the Liberals secured a close victory in yesterday’s election, despite Mark Carney’s apparent popularity, they continue to lead a minority government like under Trudeau. Canadian February GDP data is due tomorrow, anticipated to be flat following 0.4% growth in January.
### Australia
The Australian dollar remains at the higher end of its five-month range above $0.6400. After hitting a high of about $0.6335 yesterday, it slightly rose to a new high since last November near $0.6450 today, before reversing lower to around $0.6410. The 200-day moving average, which the Aussie has not exceeded since last November, is approximately $0.6460. Australia is expected to report Q1 CPI figures tomorrow, with forecasts of a slight moderation in the year-over-year headline and core rates. The Reserve Bank of Australia is perceived as one of the most assertive G10 central banks this year, with the futures market projecting about 115 basis points of cuts, equivalent to four quarter-point reductions and 60% of a fifth.
### Mexico
The dollar continues to trade near its lower bounds against the peso. After an early April spike to MXN21.08, it fell to a recent low last week near MXN19.47. Yesterday, the peso decreased by about 0.45% against the greenback amid US stock market declines. The dollar then rebounded to nearly MXN19.61 after initially touching session lows near MXN19.48 during early North American trade. Today, the dollar is higher and nears session peaks (~MXN19.6355) during late European morning trading. Last Friday’s high was about MXN19.69, and surpassing it might trigger a closing of short dollar positions. The 30-day rolling correlation between pesos and the S&P 500 is nearly 0.64, its highest level in two years. Mexico reported a $3.44 billion trade surplus for March — the largest since December 2023. The Q1 trade surplus of $1.1 billion contrasts with a $2.7 billion deficit in Q1 24. Exports rose by 12.7%, following a 10.9% rise in February, while imports broke a four-month decline, rising nearly 10.7%. Q1 GDP figures are scheduled for release on Wednesday, with Bloomberg survey forecasts erratically splitting between unchanged and slightly negative, following a 0.6% output drop in Q4 24.
