The brief relief from trade tensions faded quickly as China imposed restrictions on Boeing and the U.S. tightened chip export rules for Nvidia. While the U.S. highlighted international interest in tariff relief, the EU voiced frustration with the progress of negotiations. Comments from the Bank of Japan's Governor hinted at possible economic downgrades. The U.S. dollar lost ground broadly, with the Swiss franc leading among major currencies. Emerging market currencies, including the yuan, also strengthened. Despite China's optimistic Q1 growth data, skepticism remains about its reliability.

Asia Pacific Markets

The yen showed resilience against the dollar, on a back of U.S. bond yields dipped. The dollar hovered around JPY142, with limited upside expected due to cautious remarks from Japan’s central bank chief. The BOJ may revise its growth outlook in light of U.S. tariff impacts. Japan’s trade surplus with the U.S. rose sharply in February, driven by pre-tariff export surges.
Meanwhile, the Australian dollar extended gains from its five-year low, rising roughly 8% as it approached December highs. On a background of labor market weakness, including major job losses in February, expectations remain for a possible rate cut by the Reserve Bank of Australia.

European Markets

The euro stayed within Friday’s trading range, regaining some ground after a brief pullback. Eurozone data showed a sizable current account surplus for early 2025, though lower than last year. Eyes are now on the ECB meeting, where expectations point toward a rate cut due to a stronger euro, weaker oil prices, and the ongoing pressure from U.S. tariffs. Markets are pricing multiple cuts by year-end.
Meanwhile, sterling outperformed the euro in recent sessions. Softer-than-expected UK inflation data slightly weighed on the pound, but it continued to strengthen against the dollar, benefiting from a broader greenback pullback.

American Markets

The Dollar Index declined after recent gains but stayed within last Friday’s key range. Market attention turned to real economy indicators like retail sales and industrial production. March retail sales were expected to benefit from strong car sales ahead of anticipated tariffs, though broader consumption growth remains uncertain. Inflation-adjusted consumer spending showed signs of slowing. Industrial output was projected to dip, though manufacturing activity continued to expand modestly. Fed Chair Powell is expected to maintain a steady outlook, highlighting strength in real economic data over softer survey metrics. Foreign inflows into U.S. bonds remained strong in February.