As the US prepares to announce new tariffs, uncertainty looms over financial markets. The US dollar remains stable, consolidating within the previous day's trading range. Japan’s Tankan survey and the Reserve Bank of Australia’s decision to maintain its policy stance had little market impact. The European inflation report was in line with expectations, but the region's unemployment rate reached a record low of 6.1%. In the US, key economic reports are anticipated, including the JOLTS report and the ISM manufacturing index, which is expected to dip below the 50-point threshold. Meanwhile, equity markets showed resilience, with US stocks rebounding significantly, positively influencing Asian and European markets. Bonds remained strong, with yields declining across major economies. Commodities saw notable movement, with gold extending its surge and oil prices continuing their upward trajectory.

Asia Pacific Markets

The Japanese yen saw fluctuations as the dollar tested key resistance levels. The US 10-year Treasury yield declined before recovering, driving the dollar’s movement against the yen. Japan's Tankan survey reflected slight weakness among manufacturers, while the non-manufacturing sector remained stable. Business investment figures showed a cyclical pattern, with capital expenditure expectations falling. Inflation forecasts for the next five years increased slightly.
Meanwhile, Australia’s currency weakened, falling below key support levels. The Reserve Bank of Australia kept its cash rate at 4.10%, as anticipated. Market expectations remain focused on a rate cut in May, with further reductions anticipated later in the year. Australian retail sales showed minimal growth, continuing a trend of slower consumer spending.

European Markets

The euro showed resilience, retracing losses from earlier in March. Trading remained subdued within a narrow range, while significant options expirations loom. European investors, who purchased a record amount of US equities last year, appear to be reversing some of those positions. There is speculation that geopolitical concerns might lead to a broader shift in investment behavior, but cyclical trends remain the prevailing explanation. Inflation data for the eurozone aligned with expectations, with both headline and core inflation slightly easing. Meanwhile, unemployment dropped to a historic low of 6.1%.
In the UK, the pound continued trading within a well-defined range. Economic data showed UK house prices stabilizing, while the final manufacturing PMI declined, reflecting the weakest reading since late 2023.

American Markets

The US dollar index held above key support levels but remains within a consolidation phase. Economic focus is on the JOLTS report and ISM manufacturing index, with the latter expected to fall below 50. Job openings have almost entirely reversed their post-pandemic surge. Some economic data suggests businesses and consumers may be accelerating purchases ahead of upcoming tariffs. Meanwhile, auto sales have remained steady at approximately 16 million annualized units. Looking ahead, major events include the US tariff announcement, the upcoming jobs report, and a speech by Federal Reserve Chair Jerome Powell.