The dollar is mostly narrowly mixed against the G10 currencies. Leaving aside the Swedish krona, which has fallen nearly 0.75% on the back of an unexpected soft March CPI, the other G10 currencies are +/- less than 0.2%. Investors remain on edge ahead the US ultimatum deadline, which is in the Asia Pacific session today. There are mixed reports on how close the two sides are to a deal. It still seems binary, with a ceasefire being good for risk assets and an escalation, of course, not so much.
News has been light. Most of the final March PMIs were revised lower from the initial readings, though counter-intuitively the eurozone was an exception. China’s restraint remains notable. The PBOC set the dollar’s reference rate today at its lowest level since April 2023. Investors remain focused on the Middle East developments.
Prices
G10
• The euro reached slightly above $1.1570 in North America yesterday as hope of a ceasefire in the Middle East war seemed to peak. It made a marginal new high in European turnover today but stalled shy of $1.1580. It had been sold to about $1.1525 initially in the Asia Pacific session.
• The dollar closed little changed against the Japanese yen yesterday. The technical implication of the outside day was muted by settlement that was within the pre-weekend range. After initially falling to JPY159.30 late in the Asia Pacific session, the greenback returned to the session high, slightly above JPY159.80, but it met sellers as if they content to take profits in front of JPY160. In local trading today, the greenback edged a little closer to JPY160 before it was turned back to around JPY159.50. The JPY160 area remains of psychological importance and options for about $775 mln at JPY160 expire today and another $750 mln of options at JPY160.25 also expire.
• Sterling traded on both sides of last Friday’s range (~$1.3190-$1.3245) yesterday, but the close was within that range and that neutralized the technical signal. It was initially sold to about $1.3210 before it rebounded to almost $1.3285 in Europe. It appears stretched in front of $1.3300 where GBP330 mln of options expire today.
• The US dollar found support against the Canadian dollar yesterday and again today near CAD1.3900. Options for about $380 mln expire there today. It would take a break of the CAD1.3870 area to suggest a top is in place. Meanwhile, initial resistance is around CAD1.3950.
• The Australian dollar posted an outside up day. It traded on both sides of last Friday’s narrow range and settled slightly above its high. Follow-through buying today has been limited to the $0.6950 area ahead of the $0.6960-70 area that may offer a more formidable technical hurdle.
EM
• The dollar recorded an outside down day against the Mexican peso. It traded on both sides of the narrow pre-weekend range and settled below its low. In fact, it settled below the 20-day moving average (~MXN17.8360) for the first time since the Middle East war began. Selling today push the greenback slightly below MXN17.71. That may mark the session low. Options for $770 mln at MXN17.75 expire today.
• The offshore yuan enjoyed a firmer tone yesterday, even though the mainland markets were closed. Still the greenback found support ahead of last week’s low (~CNH6.8710). But it cut through there today, and fell to CNH6.8570, its lowest level since the Middle East war began. It may have been encouraged by the PBOC which set the dollar’s reference rate at CNY6.8854, a new low since April 2023. The re-valuation campaign, which arguably began in April 2025, does not appear over.
• The Indian rupee traded quietly today. The dollar was confined to a narrow INR92.8650-INR93.07 range. The rupee remained firm as banks reduced short dollar positions, while oil importers were dollar buyers. The 20-day moving average is around INR92.9055, and the greenback has not settled below it since the war began.
Other Markets
• Equities are mostly higher today. The large bourses in the Asia Pacific region advanced led by a 2% rally in Taiwan and 1.75% advance in Australia. Europe, returning from a long holiday-weekend is bidding the Stoxx 600, which is up about 0.65% in late morning turnover. US index futures are hovering around little changed levels.
• Benchmark 10-year yields are 1-2 bp higher in Europe. The 10-year US Treasury yield is little changed around 4.33%.
• Gold is chopping inside yesterday’s range and appears to have stalled near $4700. Silver is little changed near $72.55.
• May WTI initially extended its gains to a new high near $116.55 but pulled back to around $112.50 and is near flat on the session.
Data
• The US February durable goods orders are too dated to be impactful. The war is likely to boost defense orders. Still, a decline in Boeing orders may drag headline orders lower after a flat January report. Orders excluding defense and aircraft may have ticked up (~0.5%) after being unchanged in January. Late in the session, February consumer credit will be reported. The market looks for a modest $11 bln increase. It rose by $8 bln in January and averaged a monthly increase of $9.5 bln last year and $8.2 bln a month in 2024.
• Canada’s March Ivey survey is on tap. It runs a bit hotter than the PMI. The March composite PMI rose to 48.5 from 47.1 in February. It was above 50 once last year (October). The Ivey survey was at 56.6 in February, a five-month high.
• The eurozone’s final March services and composite PMI edged up from the preliminary estimate of 50.1 and 50.5, to 50.2 and 50.7, respectively. They were both at 51.9 in February. The eurozone is understood to be more vulnerable than the US to the disruption caused by the Middle East war.
• The UK’s final March services and composite PMI were revised lower the flash estimate of 51.2 and 51.0, respectively. The services reading eased to 50.5 and the composite stands at 50.3. In February, the services PMI was at 53.9, a six-month high and the composite was at 53.7, matching the January high, which was the best since August 2024.
• Australia’s final March services and composite PMI softened a little from the preliminary estimates of 46.6 and 47.0, respectively. In the final reading, the services PMI stands at 46.3 and the composite is at 46.6. Separately, household spending slowed slightly to 0.3%, matching the January increase. Lastly, the Melbourne Institute’s inflation survey found expectations jumped by 1.3% in March, lifting the year-over-year rate to owing the year-over-year rate 4.6% (from 3.6%).
• China’s reserves fell to $3.342 trillion in March from $3.428 trillion in February. The 2.5% decline appears to have been driven by valuation, with the dollar stronger and bonds lower. Still, the PBOC continued to accumulate gold.
• The Reserve Bank of India meets first thing tomorrow. Capital controls have spurred a short squeeze of the rupee, which takes pressure off the central bank to hike rates. Its key repo rate is 5.25%. The rate was last cut in December by 25 bp.
Reviewed by Marc Chandler
on
April 07, 2026
Rating:
