The U.S. Dollar is trading at its best level overall since the start of February, per the Bloomberg Dollar Spot Index, following renewed tensions in the Middle East and lower jobless claims than expected on the domestic front.
The latter is fresh at the time of writing, along with other indicators such as the Philadelphia Fed Business Outlook that came in better than expected. This comes after Fed Minutes were released yesterday afternoon, showing that indeed Fed members are almost in unison believing there is no need to cut interest rates further.
Geopolitics are keeping markets on edge with losses across stock exchanges and futures down as the risk of armed conflict is worrying multiple parties. Oil prices meanwhile continue to fluctuate wildly but clearly could start heading upward after Brent Crude at $71.0/barrel and West Texas Intermediate at $66.0. After investors rejoiced seeing European stocks reach record highs, the negativity surrounding tech has moved across the Atlantic with companies seeing red.
While the headlines do not bode much positivity at the moment, there is belief that we are seeing a case of “Escalate-to-De-Escalate” as a deal is still possible between the U.S. and Iran to prevent any aggression. As far as Emerging-Market currencies are concerned, their value has dropped after hitting the highest overall level a week ago, according to the MSCI Emerging Market Currency Index. We shall see if the tide changes to close out the week. Personal Consumption Expenditures, Gross Domestic Product from Q4, and the University of Michigan Consumer Sentiment survey will be the highlights in a plethora of data points out Friday morning.
What to Watch This Week…
- Banxico Minutes 10AM
- US GDP, PCE, Consumer Sentiment, Friday 8:30AM
- Monex USA Online is always open
MXN ⇓
The Mexican Peso is trading at its weakest point since the first days of February. Without much in terms of data, all eyes for Peso participants will be on Banxico’s Minutes from their last meeting two weeks ago in which they decided to keep rates unchanged. After cutting by 25 basis points and 50 bps in a few rounds throughout last year, Banxico’s members staying put has only solidified the Mexican Peso’s advancement while also having carry-trade appeal. The MXN is up by 4.2% thus far this year.
JPY ⇓
The Japanese Yen is down a bit, its weakest against the Buck in 10 days after a streak of strengthening that saw it gain as much as 2.8% since end of January. The wild Yen has been up because of political consolidation, but also vulnerable with an economy that seems to be quite stagnant, facing high inflation, meaning its is in frustrated “stagflation” mode. The Bank of Japan is concerned with stubborn inflation that is affecting consumption while starting to address the worries over the weakening of the Yen. JPY’s appreciation thus far into 2026 is just around 1.0%.
