The United States Dollar is, as has become the usual trend of late, trading weaker against most of its major peers this morning.
Overview
Volatility, though, appears to have calmed slightly after Friday’s wild swings and most FX moves are smaller than some of those markets have witnessed since April 2nd. Global equities are recovering slightly from last week’s abysmal performance, and the VIX is a touch lower as well. This comes on the heels of President Trump’s announcement over the weekend that, as of now, consumer electronics will be exempted from reciprocal tariffs, including the now 125% tariff rate on imports from China. These exemptions include smartphones, computers, and other personal electronics, though Trump did warn markets that ‘nobody is getting off the hook,’ marking this reprieve as temporary.
Even with this weekend’s small walkback of punishing levies all over the world, most markets have continued to sell off Dollars as the confidence crisis surrounding the US economy continues. The Bloomberg Dollar Spot Index, though closer to flat in trading today, has fallen a whopping 3.3% since April 1st. Most of these losses have come against G10 and safe haven assets, as minor and emerging markets have been on quite the roller coaster as well. Traditional haven currencies like JPY and CHF have reaped the benefits of this Dollar selloff in a big way over the last two weeks, gaining 4.6% and 7% against USD respectively. It’s unclear what, if anything, would stem the bleeding for USD save for a decisive shift in trade tensions between the US and China, but the reputational damage USD has taken over the last two weeks may well remain.
The domestic data calendar is relatively quiet this week, but the next central bank cycle around the world kicks off Wednesday with the Bank of Canada, followed by the European Central Bank on Thursday. The US does see retail sales for March on Wednesday, and Fed Chair Jerome Powell will speak at the Economic Club of Chicago.
What to Watch This Week…
- US Retail Sales, Wednesday, 8:30AM
- Bank of Canada Rate Decision, Wednesday
- European Central Bank Rate Decision, Thursday
- Monex USA Online is always open
The complete Economic Calendar can be found here.
GBP ⇑
Pound Sterling is the strongest performer in the G10 this morning, up just over a third of a percent against the Dollar at the time of writing. UK government bonds have extended their gains today, getting a boost from improved risk appetite around the world following President Trump’s pause on some select import duties over the weekend. Though the UK is not currently facing any reciprocal tariffs following Trump’s 90-day pause on those duties last week, some economists estimate that even current tariff levels could chop as much as half a percent off of UK GDP.
CHF ⇑
Swiss Franc is the worst performer across majors today, sliding more than a percent in early trading as global risk appetite attempts a comeback today. CHF, though, is still roughly 7% stronger against USD since the beginning of this month as its position as a bellwether for global sentiment becomes increasingly clear given the murky-at-best sentiment conditions permeating the globe. The Swiss National Bank, not set to meet until June, may well show some concern over the resurgent strength of the currency, hovering just off its strongest point against the Buck since CHF was de-pegged from the Euro in 2015.
