The U.S. Dollar is trending in weak ranges all across the board, primarily as a result of a return to gains for exchange indices globally with positive mood overtaking the tariff talk ahead of April 9th “Implementation Day.” Markets are hoping that between now and tomorrow, there will be an easing of tension as countries have offered a variety of reactions to the proposed increases in commercial trade.
Overview
While some nations are considering eliminating most of their tariffs, China has shown a willingness to retaliate, and the White House has already threatened to keep increasing the barriers on Chinese imports. As of now, the total in duties for China has accumulated to tariffs o f 104.0%.
One way the Chinese leadership is willing to go about countering tariffs is by lowering the value of their currency, which is what the People’s Bank of China is open to doing as they take part in controlling the market exchange rate for onshore CNY. While President Trump’s comments on being open to negotiations are resonating with investors’ hope for reprieve, other countries are looking to form new trade agreements, particularly with regional partners, so that there is more stability in the face of a retreat in globalization.
In the U.S., March NFIB Small Business Optimism survey revealed less optimism than expected, as owners and managers see a complicated outlook with volatility reigning. We shall see FOMC Minutes tomorrow at 2PM to check notes by officials on where they may see most concern. Most currency pairs are erasing yesterday’s losses so it’s a roller-coaster ride thus far.
What to Watch This Week…
- Fed Minutes Wednesday 2 PM
- US CPI Thursday 8:30 AM
- Monex USA Online is always open
The complete Economic Calendar can be found here.
MXN ⇑
The Mexican Peso has recovered along with other tender this morning based on the potential that proposed tariffs may not be fully implemented. The lack of certainty over anything related to trade has FX all over the place, especially the Peso, which has moved dramatically and gotten away from being at its weakest point since the start of March. We will get inflation in the form of the Consumer Price Index tomorrow, perhaps it can establish strengthening if higher than what is estimated.
JPY ⇑
The Japanese Yen is trading close to the levels seen last week which had marked JPY’s strongest point since last October. While serving as a safe-haven asset in the midst of market turmoil, the yen is also becoming more popular in flows as a reserve currency with potential for further utilization as Japan considers closer ties and freer trade with Asian nations. Japan’s importance in the global economy cannot be undermined, which is why reports of a special trading team looking to negotiate closely with the White House served as a catalyst for improvement in global markets overnight. The Bank of Japan meets on May 1st, and it would be a shock if policymakers decided to hike interest rates, but with inflationary pressures supposedly ahead, maybe they are ready to surprise the world.
