The United States Dollar is trading moderately weaker across the G10 board this morning, continuing yesterday’s move for USD following a banner Monday.
Overview
Equities are opening higher this morning, so the Dollar’s movement is now much closer to its typical inverse correlation. The S&P 500 yesterday afternoon crossed the threshold to now trade positively on the calendar year following a massive rout in early April, a surefire sign that markets have now accepted President Donald Trump’s strategy on tariffs of proposing untenable levies with the end goal of opening negotiations with many nations around the world.
Bloomberg also reported overnight that in the context of trade discussion the US and South Korea also discussed the nations’ respective currency policies, signaling that the Trump administration may be open conceptually to a weaker Dollar. This has been previously reported and discussed by members of the administration, but such an active discussion with a trading partner is fanning speculation that exchange rate discussions could become a common feature of any upcoming trade talks. Trump and his team have long argued that weakness in Asian currencies in particular have historically constituted an unfair advantage for exporters from the region over US-based exporters. These reports have boosted many Asian currencies, KRW most notably, with JPY following suit and posting an outsized gain against USD over its G10 peers.
The domestic data calendar does remain relatively bare for this week, with the exception of April’s Producer Price Index figures due out tomorrow morning. These figures are likely to mirror yesterday’s CPI release, undershooting expectations slightly but still growing from March. Retail sales is also expected to show 0 growth through April, as the impact of global trade tensions plays out in the hands of consumers.
What to Watch This Week…
- US PPI April, Thursday 8:30
- US Retail Sales April, Thursday 8:30
- UK GDP, Thursday
- Banxico Interest Rate Decision, Thursday
- Monex USA Online is always open
The complete Economic Calendar can be found here.
EUR ⇑
The single currency is extending yesterday’s positive move, gaining a further third of a percent against the Buck on the heels of a roughly 0.8% gain yesterday. EUR, however, is still trading some 2.7% lower than its peak against USD earlier this month as trade tensions between the US and China have taken a turn for the better. Reports overnight that many NATO nations are now considering raising their annual defense spending to 5% of GDP, above the coalition’s espoused target, are helping boost the currency this morning. Several Eurozone nations released CPI data for April this morning largely on expectations.
JPY ⇑
Japanese Yen is gaining against the Dollar far more than its G10 peers this morning, trading roughly a percent stronger versus USD. JPY, in addition to being bolstered with most Asian currencies this morning following reports out of South Korea that indicate exchange rate discussions may become a feature of trade talks with the Trump administration, is also catching a tailwind from hawkish commentary from Bank of Japan Deputy Governor Uchida yesterday. Japanese Finance Minister Katsunobu Kato and US Treasury Secretary Scott Bessent are set to continue trade talks soon, but Japan has said there will be no trade deal that does not include a reduction in levies against autos.
