The US dollar is showing strength against most G10 currencies, though trading remains relatively quiet. Notably, the Australian dollar is holding steady despite the Reserve Bank of Australia initiating an easing cycle. The UK reported strong wage growth and a rise in employment for the first time in three months, yet the British pound remains under pressure. Meanwhile, the New Zealand dollar is the weakest among major currencies, as its central bank is expected to implement another rate cut. In emerging markets, most Asian and central European currencies are underperforming, while the Mexican peso leads with modest gains.
In the Asia-Pacific region, the Japanese yen strengthened against the dollar following a better-than-expected GDP report, which increased confidence in the Bank of Japan's potential policy shift. Japan's economy grew at a higher-than-expected rate in Q4, reinforcing expectations for monetary normalization. Meanwhile, in China, the yuan has fluctuated in a narrow range, with the People's Bank of China maintaining a tight grip on its exchange rate. Chinese stocks traded in Hong Kong continue to perform well, with significant gains since the start of the year.
The euro recently tested support levels after last week’s strong performance, but a potential break below key thresholds could weaken its technical outlook. Germany’s ZEW survey showed an improvement in economic sentiment, though the current assessment remains historically low.
Meanwhile, the British pound experienced limited movement despite the latest employment data revealing rising wages and an increase in payroll numbers. Although the UK’s unemployment rate remained unchanged at 4.4%, jobless claims increased, influencing expectations about the Bank of England’s future rate decisions. Investors now see a high probability of a rate cut in May.
The US dollar is rebounding after a five-day decline that pushed it to a two-month low. Although recent inflation data came in higher than expected, weak retail sales weighed on the greenback. The Dollar Index reached a new high today. Meanwhile, the Federal Reserve is maintaining a patient stance, with no changes expected at the next FOMC meeting. The key focus will be the updated economic projections. Additionally, US bond yields have edged higher, with the 10-year Treasury yield moving above 4.50% after dipping below this level ahead of the holiday weekend.