The U.S. Dollar is in mixed ranges to close out a week that was characterized by central bank inactivity and concerns over the future of commercial trade
Overview
As we get closer to April 2nd, firms around different regions are preparing for may arrive in the form of trade barriers as reciprocal tariffs are possibly going to be implemented. In a slight reprieve from all the negativity, Europe agreed to halt a planned 50.0% tariff until mid-April which will cut a break for Bourbon producers out of the U.S. The back-and-forth tit-for-tat environment we are in makes it difficult for planning ahead and this is being reflected in the inconsistencies of flows in FX.
Without any data points today, rest of the trading session will be focused on headlines that may alleviate fears of contracted trade terms to come for other countries and perhaps more talk about Russia and Ukraine, which only kept attacking each other this week regardless of efforts to put a halt to the armed conflict. We continue to see Turkish Lira slump as tensions in Turkey exacerbated overnight with protests over the arrest of a key opposition figure challenging Erdorgan. Stay tuned for more speculation about Fed chances for returning to cuts. On Monday, we start chewing March data on Purchasing Managers Index.
What to Watch This Week…
- Monex USA Online is always open
The complete Economic Calendar can be found here.
EUR ⇓
The Euro slid by 1.0% in the past few days, losing its momentum after news of German fiscal plans for key expansion had helped it build a 4.3% winning run since start of March. While the appreciation of the shared currency cannot be denied, the troubles remain around other member nations of the Euro-zone where there is no consensus to act in a significant way to boost the economy. While monetary policy has helped some with lower borrowing costs to invest and lend, spending remains limited in other countries and the global narrative can always turn sour if trade barriers begin to foster retrenchment in economic activity all around.
MXN ⇓
The Mexican Peso has weakened by over 2.0% since the end of last week as tariff concerns are affecting the economic outlook. Banxico is scheduled to meet next Thursday 3/27 and are expected to keep on slashing interest rates as they have room to do so at 9.5%. Claudia Sheinbaum is said to be keeping good relations with the U.S. administration, but if the American economy is meant to stagnate, it will also bring down an already slow economy in Mexico.
