(A business trip will disrupt the daily commentary tomorrow and next week, but the weekly analysis will be posted here on April 18 and the May monthly note will drop on April 25. Thank you for your patience, and good luck).
The Dollar Index did not snap its losing streak yesterday but extended it for its eighth consecutive session to match the longest downdraft since April 2011. The streak may end today if the dollar’s gains are sustained. Despite stronger than expected UK (and China) GDP figures and a solid Australian jobs report, the greenback is trading firmer against most of the G10 and emerging market currencies. Risk appetites seem intact, with the Nikkei following the US S&P 500 and Nasdaq to record highs.
A possible two-week extension in the US-Iran ceasefire may have helped sentiment. However, with the blockade of Iranian ports in place, some projections show storage capacity would be exhausted in two weeks. The two-week extension would add pressure on Tehran. Meanwhile, President Trump indicated that the investigation into the Federal Reserve will continue and he accepted that this could delay the confirmation of Kevin Warsh to succeed Powell. What happens if the confirmation is not complete by the time Powell’s term as chair is over is not immediately clear but the president’s threat to fire Powell has been noted but apparently ignore.
Prices
G10
• The euro did not trade below $1.1770 yesterday and spent much of the North American afternoon straddling the $1.1800 area. It reached almost $1.1825, which corresponds to the (61.8%) retracement target of the euro’s decline since the last January high (~$1.2080). It was greeted by sellers who pushed it back to almost $1.1770. Initial support is near yesterday’s low and then $1.1755.
• The dollar held above Monday’s low (~JPY158.60) against the yen yesterday but stalled in front of the 20-day moving average that was found slightly below JPY159.20. It was sold to a six-day low near JPY158.25 initially, seemingly encouraged by implied threat by Japan’s Finance Minister Katayama, who after meeting with US Treasury Secretary Bessent, said officials were prepared to take “bold action” to support the yen. However, the dollar has recovered to push slightly above JPY159 in European turnover. Through the middle of the month, there has been one minor violation of the JPY158-JPY160 range.
• Sterling was confined to about a third of a cent below $1.3580 yesterday. It settled little changed on the day in uneventful turnover. Monday’s high was about $1.3590, slightly below the (61.8%) retracement of sterling’s decline since the late January high (~$1.3870). It reached a new two-month high today before the stronger than expected February GDP (0.5%) and has reversed lower. It has been sold through yesterday’s low (~$1.3545). Initial support is seen in the $1.3500-25 area. Options for about GBP307 mln at $1.3520 expire today.
• The Canadian dollar remained firm yesterday and finished strongly. The US dollar held slightly below Monday’s high (~CAD1.3795) in early North American dealings. It trended lower most of the session and took out Monday’s low (~CAD1.3730) in the NY afternoon. It slipped below CAD1.3715, the lowest level since March 23. It has steadied in the European morning and moved back into yesterday’s range. The CAD1.3740-60 area offers the initial hurdle.
• The Australian dollar reached almost $0.7180 yesterday and extended the gains to almost $0.7200 today to reach its best level since mid-2022. The upward momentum was not sustained, and the Aussie has slipped through its closing levels and is slightly lower on the day. Nearby support may be around $0.7150 and then $0.7125.
EM
• The Mexican peso traded quietly yesterday, and the stretched momentum indicators warn of the likelihood of some near-term consolidation. The peso is the fourth strongest emerging market currency this month, with a nearly 4% gain. In January and February, the dollar forged a base around MXN17.10. The greenback settled near MXN17.2270 before the war began and slipped below MXN17.20 briefly on Monday. The dollar held above MXN17.24 yesterday. It initially fell a little below MXN17.22 today but has rebounded above MXN17.28. The MXN17.30-MXN17.32 may offer initial resistance.
• The offshore yuan fell against the dollar yesterday to snap an eight-session advance. It matched the longest rally since February 2020. It is trading with a slightly softer bias today and the dollar has pushed back above CNH6.82. Nearby resistance may be around CNH6.84. The PBOC lifted the dollar’s reference rate today for the first time this week. It has been set at three-year lows for the past two sessions. The dollar’s fix was set at CNY6.8616 (CNY6.8582 yesterday).
• The Indian rupee is traded quietly and a little firmer today. The US dollar is trading inside yesterday’s range (~INR93.1335-INR93.3575).
Other Markets
• The US S&P 500 and Nasdaq equity indices reached record highs yesterday and the positive sentiment spilled over into the Asia Pacific region. Most of the large bourses gained at least 1% and the Nikkei’s nearly 2.4% was sufficient to lift it to a record high. Europe’s Stoxx 600 has been alternating daily between gains and losses for nearly two weeks. Yesterday was a down day, so today it is up. US index futures are trading firmly.
• Benchmark 10-year yields are mostly lower. The 10-year JGB yield eased a basis point to 2.39%, while European yields are mostly 2-3 bp lower. The 10-year Treasury yield is around a basis point softer near 4.27%.
• Gold is trading firmly but within yesterday’s range. It reached $4871 yesterday, its best level in nearly a month. Silver is firm, straddling the $80 level.
• May WTI dropped slightly below $87 yesterday but settled above $90, which it is holding above today. Yesterday’s high was near $93.30. Today’s high has been $93.00. A push above there could target $95.
Data
• The US reports March industrial production figures today. Both industrial output and manufacturing production are expected to have eked out a small 0.1% gain. If accurate, it would cap the strongest quarterly rise in industrial output in three years. Still, the Atlanta Fed’s GDP tracker anticipates the second consecutive quarter below what the median Fed view sees as trend growth (2%, up from 1.8% in December 2025). Also, on tap today is the NY Fed’s April services survey and the Philadelphia Fed’s business outlook. The US has seen a decline in consumer sentiment and small business optimism. Weekly initial jobless claims are due, as well. The four-week moving average has risen once since early February and that was the week ending April 3.
• Canada reports March existing home sales. They fell in the previous four months and five of the last six.
• The UK economy expanded by 0.5% in February after it unexpectedly stagnated in January. Industrial output and services activity improved sequentially, both rose by 0.5%, and construction surged by 1%. The trade deficit widened. In fact, excluding precious metals trading, the trade balance returned to deficit (`GBP2.3 bln) after January saw the first surplus since the end of 2024.
• Australia grew ~18k jobs in March and the unemployment rate was steady at 4.3%. Full-time posts grew by 52.5k, after having lost a revised 27.7k in February (initially -30.5k). Earlier this week, the deputy governor of the central bank warned that inflation was too high and acknowledged that officials were not “highly” confident that the current rate setting is sufficient, especially given the new shock emanating from the Middle East war. The futures market is discounting about 72% chance of a hike at the early May meeting.
• China reported 5.0% growth in Q1 26, which was a little better than expected. Industrial output rose 5.7% year-over-year but retail sales disappointed rising only 1.7%. Fixed asset investment ticked lower and the surveyed unemployment rate edged up to 5.4% from 5.3%. New and used house prices continued to decline, and the property market is still distressed.
• India’s trade March trade deficit narrowed. Exports fell 7.4% year-over-year in March (0.8% in February) while imports tumbled 6.5% (+24.1% in February). India also reported its March unemployment rate rose to 5.1% from 4.9%.
Reviewed by Marc Chandler
on
April 16, 2026
Rating:
