The US dollar is mostly slightly firmer against the most of the G10 currencies but largely confined to its recent ranges. The yen is the notable exception. Beijing announced it is sanctioning more Japanese companies with military ties and put others on a watch-list, which no doubt will have a cooling effect. At the same time, recent data shows many Chinese tourists are not visiting Japan. At the same time, a Japanese paper reporter that Prime Minister Takaichi was more strident in resisting tighter monetary policy in a recent meeting with BOJ Governor Ueda. The odds of an April hike were reduced from about 69% before the weekend to slightly less than 60% today, the least since mid-January.
The market continues to try to sort out the implications of last week’s Supreme Court decision and President Trump’s new tactic. Today’s Fed surveys, Conference Board’s consumer confidence, and house prices seem to a distraction from the market’s drivers. Half of a dozen Fed officials speak today but there is little doubt that barring a significant shock, the Fed is on hold through midyear at least. President Trump delivers his State of the Union address late today.
Prices
G10
• Yesterday, after reaching $1.1835 in Tokyo-less Asia Pacific trading the euro fell to session lows near $1.1775 in early New York trading. With a winter storm paralyzing the city, activity was light and the euro traded quietly, mostly in a narrow range around $1.18. The euro has still failed to close above its five-day moving average since Feb 11 (a little above $1.1780 today) It has held barely below $1.18 and recorded a low slightly below $1.1770, though above $1.1765, where options for almost 900 mln euro expire today.
• After the dollar was sold to JPY154 early in the Asian Pacific session, the greenback recovered a little above JPY155 as North American markets opened. It was sold back to around JPY154.20 after Europe closed and spent the NY afternoon consolidating between around JPY154.30 and JPY154.60. A double whammy lifted the dollar to almost JPY156.30 today, its highest level since Feb 6. First, as China returned from its extended holiday, Beijing announced export restrictions on 20 additional Japanese companies and put another 20 on as monitor list ostensibly to deter Japan’s re-militarization. Second, A Japanese paper claims that Prime Minister Takaichi was more forceful in her recent meeting with BOJ Governor Ueda over the prospects of additional rate hikes. She is expected to announce a couple of dovish appointments to the BOJ in the coming days.
• Sterling reached a three-day high before European markets opened near $1.3535. The low around $1.3475 was recorded in early North American trading. After Europe closed it was mired in a roughly $1.3480-$1.3515 range. It is consolidating quietly in a narrow range of about $1.3470 and $1.3505. Tomorrow, a special election is held in Gorton and Denton district, and a poor Labour showing will renew concerns about Starmer’s tenure as PM. Options for GBP1.2 bln struck at $1.3500 expire today.
• The greenback found a base yesterday near CAD1.3650 in the European session after bottoming around CAD1.3650 in the knee-jerk reaction to the US tariff news early in the 24-hour session. The US dollar stalled at CAD1.3700 in early North American turnover and held above CAD1.3670 for the session before poking a little above CAD1.3700 in late dealings. Follow-through buying lifted it to almost CAD1.3720 earlier today, its best level since February 6. A move above CAD1.3725 targets CAD1.3760.
• After an initial push in the Australian dollar above $0.7100, and despite the 2% surge in gold for the third time in four sessions, it was sold back to $0.7050. The Aussie was second weakest G10 currency yesterday, losing about 0.30%. The Norwegian krone’s losses were a touch more. The Australian dollar slipped slightly below $0.7050 today. The 20-day moving average is around $0.7040 and the Australian dollar has not settled below it in over a month. Options for A$560 at $0.7025 expire today.
EM
• The dollar traded on both sides of last Friday’s range against the Mexican peso and settled near but below its highs. Still, it settled above the 20-day moving average (MXN17.2425) for the first time since January 9. It traded at last week’s high (~MXN17.3010), but so far today has remained MXN17.2950. Still, it looks poised to extend its gains and follow-through buying could target the MXN17.45-50 area.
• Mainland Chinese market re-opened from the extended holiday. The PBOC set the dollar’s reference rate at CNY6.9414 (from CNY6.9398 on February 13). On February 13, the greenback settled at CNH6.9012 against the offshore yuan. Through the holiday, the dollar traded between about CNH6.88 and CNH6.9565. It lurched lower today to CNH6.8725, a new low since April 2023.
• The dollar gapped higher against the Indian rupee on February 20 after the holiday the day before. It gapped low yesterday but climbed back but did not fill the gap that extends to INR90.92. The greenback gapped higher today. Today’s dollar low was about INR90.9290 and yesterday’s high was around INR90.8940. The Reserve Bank of India reportedly intervened, but the dollar settled firmly above INR90.95.
Other Markets
• Equities are mixed today. In the Asia Pacific region, Tokyo markets edged higher, while Hong Kong and the mainland stock that trade there were sold off with 1.8-2.0% losses. Mainland markets re-opened with around 1% gains. Taiwan and South Korea markets jumped 2.75% and 2.1%, respectively. India’s main bourses shed more than 1%. Europe’s Stoxx 600 is nursing a small loss, and US index futures are a little firmer after shedding more than 1% yesterday.
• The benchmark 10-year JGB yield slipped 2.5 bp today to about 2.075%. European yields are softer, paced by a 1.5 bp decline in the 10-year UK Gilts yield and an almost 2.5 bp decline in Sweden’s benchmark. The 10-year US yield is flat near 4.035%. It has not been below 4% since the end of November.
• Gold rallied 2.35% yesterday and settled near $5227. It is giving almost half of that back today. It is off a little more than 1% to trade around $5172 late in the European morning. Silber is faring a bit better. It rallied 4.2% yesterday and is off about 0.25% to slightly below $88.
• April WTI is consolidating quietly within yesterday’s range and holding above $66, albeit barely.
Data
• The US sees a rash of surveys (Philadelphia Fed’s non-manufacturing activity, Richmond Fed, Dallas Fed, and Conference Board consumer survey today. Also, FHFA and S&P measures of house prices are due. Meanwhile, many look GDP to recover in Q1 after the soft Q4 25 figures with the government re-opening. The Atlanta Fed is beginning with 3.1% from its tracker. The market is less sanguine has 2.3% penciled in. Six Fed officials speak today. The Fed funds futures have the next cut fully discounted for July and a little more than 60% of the cut being delivered in June.
• Mexico reports CPI for the first half of February. The year-over-year rates expected to be little changed at 3.87% and 4.56%, respectively. The target range is 2-4%.
• The UK’s CBI reported a deterioration in February retail sales (-43 vs. -17) but after the blockbuster 1.8% jump in January that CBI failed to anticipate, some pullback seems reasonable to expect. Last year, UK retail sales rose by a monthly average of 0.2%.
• Australia reports January CPI first thing tomorrow. The year-over-year rate is seen slowing slightly to 3.7% from 3.8%, while the trimmed mean looks unchanged at 3.3%. The futures market has about an 85% chance another hike at the May RBA meeting.
• Japan’s market re-opened after the weekend was extended Monday for the Emperor’s birthday. With the national core CPI reading back at its 2% target, as we learned before the weekend, tomorrow’s PPI services will likely have a muted effect. The swaps market has a little more than a 50% chance that the next hike is delivered later here in H1 26. Another hike is discounted for H2 26.
• Chinese banks, as widely expected, kept their one- and five-year loan rates steady at 3.0% and 3.5%, respectively. Still, many expect a small cut in rates and reserve requirements are likely this year.
Reviewed by Marc Chandler
on
February 24, 2026
Rating:
