The U.S. Dollar is trading in weaker ranges as tariffs continue to dominate headlines with the potential for more headwinds to come from inflationary pressures
Overview
For weeks, the focus across markets has been on the timeline for additional tariffs as implementation is likely to exacerbate concerns about price growth, which has remained an obstacle to improving the pace of economic growth. Without clarity about where additional costs will be applied, firms are readying themselves to adjust their prices to consumers. Since higher prices are likely in the horizon, bets on the likelihood that the Fed will be making multiple interest-rate cuts this year are declining.
April 2nd is the key date for the announcement of reciprocal tariffs and volatility will remain high through then. In terms of data, we already had the release of February Building Permits reveal greater contraction than was expected at (-1.0%) vs (-0.1%). Later on, at 10AM, we will have numbers on New Home Sales for February as well as Conference Board Consumer Confidence from March. Tomorrow, we will get a look at durable Goods Orders, which are estimated to have dropped by (-1.0%). A slew of major key points will be released in the next few days, including a final look at Q4 figures.
What to Watch This Week…
- Durable Goods Orders on Wednesday
- Q4 U.S. GDP on Thursday
- Monex USA Online is always open
The complete Economic Calendar can be found here.
JPY ⇑
The Japanese Yen rose by half a percent as this month continues to be a roller-coaster ride that has seen it return to where it was trading at the end of February. As global trade rolls with the punches, the Yen has become a safe-haven asset to hold on to, especially now as the future of international commerce looks less certain. Both the Prime Minister and the Bank of Japan are also hoping to manage inflationary issues and the chances for seeing interest rates have gone up for May and June BOJ meetings to 24.0% and 34.0% respectively.
MXN ⇑
The Mexican Peso is up slightly this morning, adding to its monthly resurgence which has seen it climb by 2.7% in value over the Buck. Although lately indicators have shown a weakening across data, Mexico caught a break when it comes to consumption with January Retail Sales rising by a shocking 2.7% vs. 1.1% estimated. While tariffs may be scaring plenty, Mexican President Claudia Sheinbaum has been deemed cooperative and effective by the White House in pursuing concessions and avoiding the levying of tariffs. We shall see if Q1 can end up one for the history books as Peso already has managed a 4.0% improvement thus far.
