The war continues to dominate, but the dollar is trading lower against the G10 currencies. April WTI is trading in around a $3 range on both sides of $99 a barrel. US and European benchmark 10-year yields are a little softer. If the markets seem calmer, recognize that it is precarious as the fog of war limits visibility. Meanwhile, Chinese macro data for February were reported mostly a little better than expected, French municipal elections race run-off next weekend and the key is who can form alliances
Before the weekend, a US federal court blocked the Justice Department’s subpoena of the Federal Reserve and US attorney for the District of Colombia (Pirro) says she will appeal but it appears no formal decision has been made. The shift in the calculation of the US PCE deflator from using the CPI measure of legal services to the PPI estimate caught the market by surprise as it was not announced or explained, but seems to have taken about 0.1% off the core measure, playing on fears of the integrity of US data.
Prices
G10
• The euro reached almost $1.1480 today in European turnover. After initially falling on Friday in early European trading, slightly below $1.1435, the euro recovered to around $1.1490. The bounce was already taking place before the US Q4 25 GDP was revised to 0.7% from 1.4% initially. However, in the afternoon of NY, the euro was sold pushed to new lows a little above $1.1410, as if the short-term market wanted to be long US dollars exacerbation of the fog of war over the weekend.
• The yen was the strongest G10 currency before the weekend, slipping 0.20% against the dollar. The market seemed to grow cautions in front of the JPY160 level, to which we attribute psychological significance, and note that options for $845 mln struck there expire today. It reached JPY159.75. That area has held today, and the greenback slipped to almost JPY159.15. If intervention is a ladder, Japanese officials have barely stepped on it since the war. Finance Minister Katayama’s comments were boilerplate fare, saying that officials were prepared to take all necessary steps is a low rung even in verbal intervention.
• After selling off on the disappointing news that the UK economy stagnated in January, slightly below $1.3250, sterling recovered in the NY morning to on Friday to almost $1.3300 before stalling. It was sold to new session lows-new lows for the year—near $1.3220 ahead of the weekend. It is firm in Europe and approached $1.3275 after holding above Friday’s low.
• The disappointingly poor Canadian jobs report pushed the greenback through an open door to a little above CAD1.3740. Moreover, the US dollar settled above CAD1.37 for only the second time since the end of January numerous attempts. The US dollar also settled above the down trendline connecting the late November and mid-January highs, found near CAD1.3725 before the weekend. It is consolidating quietly between a little below CAD1.3690 and CAD1.3730 so far today. Overcoming resistance near CAD1.3760 would target the CAD1.3800 area next, which appears more formidable.
• After reaching its best level since mid-2022 in the middle of last week (~$0.7190), the Australian dollar fell victim to profit-trading as the same time the futures market scaled back the likelihood that the Reserve Bank of Australia hikes rates tomorrow. The futures market now has about a 65% chance of a hike, down from almost 87% before the war began. The Australian dollar was ground down to $0.6980 in NY afternoon trading ahead of the weekend. It has stabilized today, holding Friday’s low and pushing near $0.7030. Last week’s low was set Monday (~$0.6955) and the low for the month was on March 3 (~$0.6945). A break of those lows could spur a move toward $0.6900.
EM
• The US dollar settled near a two-month high against the Mexican peso, but on an intraday basis it held below the week’s high set Monday near MXN18.0245. The greenback is trading heavier today and was sold to about MXN17.8050. Friday’s low was slightly below MXN17.75. Options for about $615 mln at MXN18.00 expire today.
• Last week’s dollar low against the offshore yuan likely marked the lower end of a new range that likely extends to the CNH6.95-CNH6.96 area. The greenback is trading quietly today between about CNH6.8965 and CNH6.9085. PBOC set the dollar’s reference rate higher today (~CNY6.9057 vs. CNY6.9007 on Friday). It is the third consecutive increase in the dollar’s fix, the longest advance this year. We hold out the possibility that the dollar’s fix rises this week for the first week for only the second time since the end of last September.
• The Indian rupee remained soft today despite a couple of its tankers moving through the Strait of Hormuz. The central bank reportedly intervened. The dollar reached a record high at the end of last week near INR92.4790 and today, it has held slightly below there.
Other Markets
• Equities are mixed today. After falling nearly 2.5% last week, MSCI Asia Pacific Index was still heavy today, though Hong Kong’s Hang Seng, China’s CSI 300, South Korea’s Kospi and India’s indices advanced. Europe’s Stoxx 600 is extending its losing streak for the fourth consecutive session. US index futures enjoy a firmer tone today, with the S&P futures up about 0.55% and the Nasdaq futures around 0.70% better.
• Benchmark 10-year yields are getting some relief after the Asia Pacific markets played catch up after the advance in North America ahead of the weekend. European 10-year yields are mostly 2-4 bp lower and the 10-year US Treasury yield is a couple of basis points softer, near 4.25%.
• After several tests in the past two weeks, gold is being pushed below $5000 today. It broke down Asia Pacific traded and recovered to almost $5036 before returning toward its lows in European turnover. For its part, silver is breaking $80 for the third time since the war began but may close below it for the first time since February 19.
• April WTI opened firmly and reached almost $102.45, a five-day high before pulling back. It is holding above $98 in the European morning, after having been sold to about $96.75 in early Asia Pacific turnover.
Data
• In the week that features central bank meetings, including the Federal Reserve, today’s US February industrial output figures will receive passing interest. A small rise is anticipated after the 0.7% gain in January, which was the largest since last February’s 1% surge. Given the new US 301 trade investigations on “over-capacity” allegations, it is interesting to note that the US capacity utilization is around 76.2%, compared with about 78.2% in the eurozone. China’s was around 75% in Q4 25. Japan and South Korea report their capacity utilization figures on an index based in 2020. Japan’s is near 100 and South Korea is around 103. The March Empire State manufacturing survey is due, as well. It may be scrutinized for early impact of the war.
• Canada reports February CPI today after the flat January reading. There will be a strong base effect, as last February’s 1.1% rise drops out of the 12-month comparison. The headline CPI was at 2.3% in January. The underlying core measures stood at 2.4%-2.5%, which Bank of Canada Governor Macklem indicated were understood to be a little overstated. The swaps market has about 30 bp of tightening discounted for this year, up from 11 bp of cuts before the war.
• Today was the day that China released much of its macro-economic data. The takeaway is that both industrial production and retail sales were reported better than expected. At the same time, the property market continues to hemorrhage. House prices continued to fall in February and property investment and sales continued to contract. Even before successfully stabilizing the real estate market, Beijing has taken on involution (excess investment). However, non-rural fixed asset investment continues edged up on a year-to-date, year-over-year basis for the first time in five months.
• India reported February wholesale prices rose 2.13% year-over-year in February (1.81% in January. The February merchandise trade deficit narrowed to $27.1 bln from $34.7 bln in January. Exports slipped 0.8% year-over-year, while imports surged 24.1%.
Reviewed by Marc Chandler
on
March 16, 2026
Rating:
