The markets have put much stock in President Trump’s signal that the war on Iran may be nearly over. News today suggests that the Strait of Hormuz remains mostly blocked and several European countries have committed more military hardware to defend the UAE. In the fog of war, public pronouncements are part of the war effort. Nevertheless, the markets seem hopeful. Still, the follow-through enthusiasm from yesterday appears to have run its course, and it is as if they are waiting for fresh developments or clarification.
The dollar is mostly narrowly mixed against the G10 currencies. April WTI extended yesterday’s setback but is several dollars a barrel off the earlier low (~$84.45). Equities are higher. China reported another large trade surplus while the PBOC set the dollar’s fix relatively sharply lower (0.25%) to a new multi-year low.
Prices
G10
• The euro recovered from a four-day low on Monday in the Asia Pacific session slightly below $1.1510. It reached session highs of almost $1.1640 in response to comments from Prent Trump saying the war could be ending soon. The euro rose above the previous session’s high for the first time this month. It posted an outside up day, by trading on both sides of last Friday’s range and settling above it high. Follow-through buying today lifted the euro to almost $1.1665, but it is not lower on the day. Options for nearly a billion euros at $1.1650 expire today and another set for 875 mln euros at $1.1600 also expire.
• After it approached JPY159 as oil spiked in the Asia Pacific session yesterday the dollar reversed lower following President Trump’s comments and fell to around JPY157.65. A bearish shooting star candlestick was forged. And although Q4 25 GDP was revised sharpy higher and oil prices extended their pullback, follow-through dollar selling was limited to a little more than JPY157.30. Initial support around JPY156.50
• Sterling recovered smartly from a four-day low slightly below $1.3285 and pushed to nearly $1.3450 after President Trump’s comment. Its gains have been extended to almost $1.3485 today and has approached a band of resistance in the $1.3490-$1.3510 area.
• The greenback initially fell to nearly CAD1.3525, almost a four-week low yesterday. It recovered in North America to around CAD1.3610. It is trading quietly today inside yesterday’s range. Initial resistance is around CAD1.3615 and then CAD1.3630-40. Meanwhile, Prime Minister Carney has called special elections to fill three vacant seats in the House of Commons (April 13). If his Liberal Party wins all three, he will have a one seat majority.
• The Australian and New Zealand dollars posted bullish outside up days (traded on both sides of the previous session’s range and settled above the previous day’s highs. Follow-though buying has been limited and both remain within the range set last Tuesday (Aussie~$0.6945-$0.7125 and Kiwi ~ $0.5835-$0.5955). The Australian dollar has risen about $0.7100, where options for almost A$350 mln expire today.
EM
• The initial risk-off mood yesterday sent the Mexican peso, a proxy sometime for less liquid emerging market currencies to a two-month low before it steadily recovered. The US dollar traded above MXN18.00 for the first time since January 9. When the greenback reversed broadly, it was sold to about MXN17.5980 and settled below the pre-weekend low (~MXN17.6375) for an outside down day. Follow-through selling today took the dollar slightly through MXN17.5150, where it stalled in Europe. A break of MXN17.50 could spur a move toward MXN17.34-MXN17.37.
• Against the offshore yuan, the dollar initially approached a four-day high near CNH6.9340 before the gains were pared. The greenback was sold to new session lows in the North American afternoon amid the broader setback. It reached almost CNH6.8850. The dollar also recorded an outside down day against the offshore yuan. The greenback has fallen to about CNH6.8720 today to fray last Tuesday’s low. Today’s dollar low may not be in place. Nearby support is seen near CNH6.85-6. Reports suggest that Chinese ships carrying Iranian oil are passing through the Strait of Hormuz unmolested. The PBOC set the dollar’s fix a new multiyear low (CNY6.8982 vs. CNY6.9158 yesterday, a 0.25% adjustment, which matches the largest change in over a year.
• The pullback in oil prices gave the Indian rupee a reprieve. After falling to record-lows yesterday, it recovered today, even though foreign investors sold Indian stocks and bonds. The dollar was sold from slightly above INR92.19 to about INR91.7425 and closed near INR91.8050.
Other Markets
• Global equities have rallied after the dramatic recovery in the US yesterday and lower oil prices today. South Korea’s Kospi led the Asia Pacific region’s large bourses with a 5.35% gain. Most markets were up more than 1%. Europe’s Stoxx 600 is snapping a three-day slide with a 2.1% increase in morning turnover. US indices are 0.25%-0.35% better.
• Benchmark 10-year yields are lower in the Asia Pacific region and Europe. The 10-year JGB yield slipped once basis point to 2.16%, while Australia’s 10-year yield fell nine basis points. European yields are mostly lower, with the periphery premiums narrowing over German Bunds, which are practically flat. The 10-year Gilt yield is off a little more than six basis points to 4.58%. On the other hand, the 10-year Treasury yield is a couple of basis points better, near 4.12%.
• Gold is firm near yesterday’s high but has held below $5200. Silver has risen through yesterday’s high (~$87) and is reached $90 before consolidating.
• April WTI peaked yesterday near $119.50 and settled near $94.75. It fell to around $84.45 today but is near $88.50 in the European morning.
Data
• Weakness in pending home sales and losses of white-collar jobs warns of continued challenges for US new home sales. After falling 8.4% in January, the most since February 2022, they are expected to have softened further in February. A 3,88 mln unit seasonally adjusted annual pace, which is projected by the median in Bloomberg’s survey, would be the lowest since the end of 2023.
• Germany and France reported January trade figures today. Germany reported a 21.2 bln euro surplus, up from 15.9 bln euros in January 2025. It averaged a monthly surplus of 16.9 bln euros in 2025 (vs.20.4 bln euros in 2024). France reported 1.8 bln euro trade deficit (vs. 6.2 bln deficit in January 2025). The average monthly shortfall last year was about 5.8 bln euros after an average 6.6 bln euro monthly deficit in 2024.
• Japan’s economy appears to be off to a firm start to the year before the Middle East War. Yesterday, it reported a rise in real wages and but today disappointing 1.0% decline in the year-over-year in real household spending. On the other hand, last year ended the economy had better traction than initially appeared. Earlier today, Japan revised Q4 25 GDP higher (1.3% from 0.2% at an annualized rate), mostly on the back of better capex, though consumption also was revised slightly higher.
• China reported February trade figures today. Exports rose 39.6% from a year ago and imports were up 13.8%. The February trade surplus stood at $90.98 bln compared with $31.2 bln in February 2025. The US share of Chinese exports fell to a new low of 10.2% in the January-February period, down from 11.1% in the 2025 period.
Reviewed by Marc Chandler
on
March 10, 2026
Rating:
