The US dollar is starting the week with a quiet tone as investors anticipate four G10 central bank meetings and upcoming US economic data. President Trump has also renewed his warning about reciprocal and sectoral tariffs due to be announced on April 2nd. Here's a breakdown of the key market movements and factors influencing them:
Key Currency Movements and Influences:
- US Dollar (USD): Consolidating, with downside momentum stalled around 103.25. Fresh sellers appear above 104.00. Upcoming real sector data and the Federal Reserve's assessment may ease economic slowdown fears.
- Euro (EUR): Trading quietly, supported by reports of a potential agreement in Germany regarding its new fiscal initiative. Focus remains on negotiations in Germany.
- Chinese Yuan (CNY): The dollar has slipped against the offshore yuan. The PBOC set the dollar's reference rate sharply lower, signaling a potential need for more economic support to meet growth and inflation targets.
- Japanese Yen (JPY): The dollar is trading near JPY148.65 after recording five-month lows. Rising US rates and falling Japanese rates drove gains before the weekend. The BOJ meeting is a key event this week.
- British Pound (GBP): Showing resilience despite unexpected contraction in January's GDP. The UK economic calendar is light until Thursday's employment data and Bank of England meeting.
- Canadian Dollar (CAD): Policy uncertainty stemming from US trade actions and the new prime minister's intent is impacting the CAD. Attention is on the US trade war and Canada's upcoming parliament session.
- Australian Dollar (AUD): Finished last week strong, but intraday momentum is stretched. Australia's economic diary is light until Thursday's employment report.
- Mexican Peso (MXN): Resilient to US tariff threats, with the dollar trading below MXN19.85. The central bank is poised to deliver another rate cut.
- Brazilian Real (BRL): Inflation jumped in February, leading to expectations of a rate hike. The dollar traded through BRL5.72.
Economic Data to Watch:
Several key economic data releases are expected this week, which could significantly influence market sentiment:
- US: February retail sales, housing starts, and industrial output.
- Japan: January tertiary industry index and February trade figures.
- Canada: February CPI report.
- Australia: February employment report.
- Mexico: First half of March CPI next Monday.
Central Bank Meetings:
This week is packed with central bank meetings, with potential policy changes that could move the markets:
- Federal Reserve
- Bank of Japan
- Sweden's Riksbank
- Swiss National Bank
- Bank of England
Other Factors:
- President Trump's renewed warning about reciprocal and sectoral tariffs.
- Political developments in Germany regarding fiscal initiatives.
- US strike on the Houthis and Yemen impacting oil prices.