Recent signals from the U.S. administration have helped calm investor concerns, particularly the delay in reciprocal tariffs and possible postponement of auto tariffs. President Trump hinted at a softer stance on trade measures, especially those targeting semiconductors. As a result, equity markets have steadied and the dollar is mostly consolidating within last week’s range. The British pound and Australian dollar have shown independent strength, while the Canadian dollar is on a similar path. Emerging market currencies remain mixed, with no clear regional trend.

Asia Pacific Markets

In the Asia Pacific, the Japanese yen is trading within a narrow range, reflecting the pullback in U.S. yields after last week's surge. A deeper correction in yields could weaken the dollar further, potentially pushing it below the JPY142 level. Japan’s slowing economic momentum is becoming more evident, with modest growth forecasts for upcoming quarters.
Meanwhile, the Australian dollar has rallied strongly, rebounding from a multi-year low and now challenging levels last seen in late 2023. Improved sentiment and positive developments in trade negotiations with the U.S. have supported this recovery.

European Markets

The euro has paused after a recent rally, holding above $1.1250, which suggests potential for further gains unless it breaks below that level. Economic data from the eurozone was better than expected, with industrial production seeing its largest rise in over a year. However, investor sentiment has taken a hit following a decline in Germany’s ZEW expectations index.
In the UK, sterling climbed to fresh highs near $1.3240, partly driven by positioning ahead of economic data releases. Market expectations for a Bank of England rate cut in May remain firm, supported by a stagnating economy and easing inflation pressures.

American Markets

The U.S. dollar continues to consolidate, with the Dollar Index remaining range-bound but marking five consecutive sessions of declines. Market participants are interpreting the administration’s softer approach to trade as a sign of sensitivity to financial market reactions. While sector-specific tariffs may still be on the horizon, the delay in broader measures suggests a pause in escalation. Upcoming economic indicators, such as the NY Fed survey and import/export prices, are unlikely to drive major market moves. The focus remains on congressional checks and the broader implications of shifting U.S. trade policy.