The North American market understood yesterday’s Fed statement and the three dissents in favor of a neutral bias as a hawkish hold and rallied the dollar in response. Follow-through selling today has been minimal and the greenback is sporting a softer profile. The strongest currency today is the Japanese yen, which had fallen to its lowest level since July 2024, before heightened Japanese verbal intervention. The threats of material intervention were successful, and the dollar reversed lower from the JPY160.70 area to fray JPY159.00 in the European morning.
Meanwhile, reports suggesting that the US is considering new military strikes on Iran amid the stalled talks after President Trump reject Iran’s proposal. However, after the initial flurry that lifted oil futures to new highs, both the June WTI and July Brent contracts have reversed lower and ahead of the North American open, both are off around half-of-a-dollar. The outcome of the BOE and ECB meetings are awaited. Both are expected to attempt a hawkish hold. Lastly, on the back of strong capex, the US reports its first look at Q1 GDP today. The median forecast in Bloomberg’s survey is for a 2.3% annualized pace, while the Atlanta Fed’s tracker is almost half of it (1.2%).
Prices
G10
• Strong US economic data and a hawkish hold by the Federal Reserve drove the euro lower. It was sold through last week’s low (~$1.1670). The euro was sold to $1.1655 in the Asia Pacific session today before recovering to almost $1.17. Options for almost 1.5 bln euro at $1.1725 expire today. On the downside, nearby support may be near $1.1645, and a break could signal another half-to-full-cent loss.
• The yen remained pressured by the broad dollar gains and the jump in the US rates. The dollar reached almost JPY160.50 as the US 30-year yield touched 5% for the first time since last July. It reached slightly above JPY160.70 today before stepped up verbal intervention by top Japanese officials. Finance Minister Katayama warned of “bold action”, while FX Chief Mimura cautioned that this was “the final advisory if you want to escape”. The dollar dumped to around JPY158.75. We suspect that the greenback can recover back toward JPY160 in the North American session. The dollar fell for the previous three weeks before last week, suggesting there has not been a one-way market. Implied volatility is low. The BOJ again held off raising rates, while two days later the Federal Reserve delivered a hawkish hold. These are not the conditions conducive for intervention.
• Sterling slipped to marginal new low for the week yesterday, slightly below $1.3460. Last week’s low was about a tenth of a penny lower, which is still holding today. A break of the $1.3440 area would suggest scope for another cent decline, in the context the falling momentum indicators. Yesterday’s high was near $1.3530, and overcoming it, would lift the technical tone.
• The Canadian dollar settled remarkable little changed on the day yesterday despite the neutral sounding Bank of Canada left rates on hold and the hawkish cast to the Federal Reserve standpat decision. The greenback tested the upper end of its recent range, CAD1.3710-5. It is holding so far today. It may take a move above CAD1.3730 to confirm a bottom is in place. Options for $505 mln at CAD1.3637 expire today and $300 mln at $1.3665 also expire.
• The greenback’s strength proved too much for the Australian dollar yesterday, despite the likelihood that the Reserve Bank of Australia. The Aussie, which kissed $0.7200 on Monday, approached $0.7100 yesterday. This is holding today and the Aussie recovered to almost $0.7150. A break of the $0.7075 could spur another half-cent loss.
EM
• The dollar rose to a three-week high against Mexican peso yesterday. Most emerging market currencies fell. The greenback traded to almost MXN17.5720. The gains were extended to about MXN17.5840 today before pulling back to MXN17.5165. Provided the MXN17.50 area holds, there may be near-term potential toward MXN17.60-MXN17.65. Brazil’s central bank delivered a quarter-point cut for the second consecutive meeting, to 14.50%. The dollar closed slightly below BRL5.0. The next target is around BRL5.03 and a move above there could be worth another 1%. The dollar looks poised for additional gains against the Colombian peso. A push through COP3680 may spur a move into the COP3700-COP3715 area.
• The dollar rose to almost CNH6.85 yesterday, its best level in three weeks. It has held today and the greenback eased to almost CNH6.8320, just ahead of yesterday’s low. There may be scope for gains toward CNH6.8650-CNH6.8750 during this corrective phase. The PBOC raised the dollar’s fix for the third consecutive day (CNY6.8628 vs. CNY6.8608 yesterday). It was the sixth increase in the past seven sessions.
• Higher oil prices encouraged the pressure on the Indian rupee, which fell to a record low against the dollar. It has unwound the gains spurred by exchange rate controls. The dollar rose to about INR95.3337 today and the Reserve Bank of India reportedly intervened. It is finishing around INR94.92.
Other Markets
• Equities are mixed today. The large bourses fell in the Asia Pacific region. Singapore was a notable exception, with a 1% gain. China’s CSI 300 slipped fractionally even though the Shanghai and Shenzhen Composites rose. Europe’s Stoxx 600 is trying to snap a four-session downdraft. US index futures are narrowly mixed.
• Benchmark 10-year yields rose in 4-6 bp in the Asia Pacific region, leaving aside China. Yields are softer in Europe ahead of the Bank of England and ECB rate announcements. The US 10-year Treasury is a few basis points softer to straddle the 4.40% level.
• Gold was already trading heavily but the yesterday’s rise in the dollar and rates did not help. It approached $4510, a new low for the month. It has returned bid today and is near $4625. The 1.7% gain being posted, if sustained, would be the largest in almost three weeks. Silver traded below $71 yesterday, which it had not done since April 7. It is up about 3% today and is hovering around $73.50.
• June WTI settled at a new contract high of almost $108.20 a barrel, an 8.25% increase on the day. It was the third consecutive advance and the seventh in the past eight sessions. It approached $111 today before pulling back. It is little changed on the day ahead of the North American open, near $107.
Data
• The US economic diary is jammed today. However, widely expected stand pat decision by the FOMC yesterday steals some of the thunder. The March PCE deflator is seen rising by 0.7%, which would lift the headline pace to 3.5% from 2.8%. The core rate is expected to rise by 0.3% from a 3.2% year-over-year rate (from 3.0%). The personal income and expenditure data will be overwhelmed by the first estimate of Q1 GDP. The Atlanta Fed’s tracker puts it at 1.2%, while the median forecast in Bloomberg’s survey is for a 2.2% annualized pace. Weekly initial jobless claims will be overshadowed by the other reports, and next week’s non-farm payroll report where the early call is for around 60k after 178k increase in March (subject to revision).
• Canada reports February GDP. StatCan projects the economy grew by 0.2% after 0.1% in January. The economy contracted by 0.6% in Q4 25 at an annualized pace. The economy still looks vulnerable.
• Mexico is expected to report a 0.6% quarter-over-quarter contraction in Q1 26 today, after growing 0.9% in Q4 25. The Mexican economy is struggling, and although inflation is above target, the central bank has signaled that it could cut rates again after last month’s move. The economic weakness and high-profile crimes have seen President Sheinbaum’s support wane.
• The eurozone reported Q1 GDP expanded by 0.1%, after 0.2% in Q4 25, slightly disappointing. The preliminary April CPI rose 1% for a 3.0% year-over-year pace. The core rate was slipped to 2.2% from 2.3%. The outcome of the ECB meeting is awaited. A hawkish hold is the most likely scenario, with the market confident of a hike in June.
• The Bank of England decision is due momentarily. It is nearly universally recognized that it is on hold. The swaps market has about 70% chance of a hike at the next meeting in June. It is pricing in two hikes fully this year and about a 40% chance of a third.
• Australia reported private sector credit rose by another 0.7% in March, lifting the year-over-year pace above 8%. Australia is also experiencing a positive terms-of-trade shock. Its export price index rose 0.5% in Q1 after a 3.2% surge in Q4 25. The import price index rose 0.9% in Q4 25 and rose 0.1% in Q1 26. The futures market is discounting almost an 80% chance of a hike next week.
• Japan reported retail sales rose by 1.3% in March after a 2.0% drop in February. It was about twice the increase that economists projected in the Bloomberg survey. The year-over-year pace rose to 1.7% from -0.1%. March industrial production, on the other hand, disappointed. It fell by 0.5%, compared with projections of a 1.1% increase. It fell by 2.0% in February. Yet, the 2.3% year-over-year increase matches the best reading since the middle of last year. Still, earlier this week, the BOJ halved this year’s GDP forecast to 0.5%. The median forecast in Bloomberg’s survey is for 0.7% growth, the same as the IMF’s latest projection.
• China’s PMI softened. The manufacturing PMI eased to 50.3 from 50.4. The non-manufacturing PMI slipped to 49.4 from 50.1. The composite reading pulled back to 50.1 from 50.5. The RatingDog manufacturing PMI (previously Caixin) rose to 52.2 from 50.8.
Disclaimer
Reviewed by Marc Chandler
on
April 30, 2026
Rating:
