The markets seem nervous. The dollar is higher against all the G10 currencies and most emerging market currencies. June WTI, which was at $82.60 on April 17, is now pushing against $100. July Brent, which was at $86.50, is now approaching $105. Both are up for the sixth session of the past seven. Equities and bonds are mostly lower. Gold and silver are offering no haven today and are at 2–3-week lows.
The bevy of this week’s central bank meets began with the Bank of Japan. Initially the 6-3 vote to keep rates steady seemed a bit hawkish but Governor Ueda failed to deliver an unambiguously hawkish message and the yen reversed lower. The market has not given up on the JPY160 level. Tomorrow, the Bank of Canada, and the Federal Reserve meeting. And arguably more momentous, Kevin Warsh will likely be confirmed as the next Fed chair, ushering in a new era after the Bernanke-Yellen-Powell continuity.
Prices
G10
• The euro made a marginal new high in early North American turnover yesterday, near $1.1755. The $1.1760 area is the halfway mark for the decline from the April 17 high (~$1.1850) to last week’s low (~$1.1670). It found support in late dealings yesterday, near $1.1720. Follow-through selling saw it approach $1.1685 today. The 20-day moving average is near $1.1690, and the euro has not settled below it since April 3. A move above $1.1710-20 would be constructive, but there are ~2.9 bln euro options struck at $1.1700 that expire today.
• Some short yen positions were covered yesterday ahead of the outcome of the BOJ meeting today. The greenback fell to a four-session low near JPY159.10. It slipped below JPY159 on the 6-3 BOJ decision to stand pat. The JPY158.70 area corresponds to the (50%) retracement of the greenback's recovery from the April 17 low (~JPY157.60) to last week’s high (~JPY159.85). However, Governor Ueda did not stick the landing with an unambiguous bearish signal and the greenback recovered to new session highs near JPY159.70. Our reading of the momentum indicators suggests the market has not given up on the JPY160 area.
• Sterling reached a six-session high yesterday near $1.3575. We continue to note formidable resistance around $1.36, which capped sterling earlier this month. It also corresponds to the (61.8%) of sterling’s drop from the year’s high on January 27 (~$1.3870) to the March 31 low (~$1.3160). It returned to around $1.3530 in the North American afternoon. It has been driven below $1.35 where options for GBP756 mln expire today. The $1.3510-20 area offers initial resistance.
• The Canadian dollar saw its best level since March 12 yesterday early in the North American session. The US dollar briefly traded slightly below CAD1.3600. A recovery to around CAD1.3625 found new sellers. The March low was around CAD1.3525. The modest losses in US equities yesterday seemed to help put a floor under the greenback, which has recovered to almost CAD1.3660 today. A move above CAD1.3670-90 lifts the tone for the US dollar.
• The Australian dollar recorded its highest close in nearly four years yesterday (~$0.7185). It reached a new six-day high near $0.7200 in North American turnover. Options for almost A$1.4 bln expire there today. About two weeks ago, on an intraday basis, it poked slightly above $0.7220. It has come back better offered today. Initial support was found near $0.7160. A break of $0.7145 could spur a test on a stronger floor in the $0.7100-10 area.
EM
• The Mexican peso traded quietly yesterday. For the past two sessions, the greenback has been confined to the range set last Thursday (~MXN17.33-MXN17.4660). The daily momentum indicators have turned up from oversold territory. It looks poised to move higher. The 20-day moving average is near MXN17.4560 and the US dollar has not traded above it since April 6.
• The dollar extended yesterday’s pullback slightly against the yuan in early North American turnover yesterday and briefly traded below CNH6.82. It recovered to CNH6.8280. Follow-through buying lifted the greenback to a new two-week high, slightly above CNH6.84 today. This tests the 20-day moving average, which the dollar has not traded above since April 2. After setting the dollar’s reference rate higher in seven of the past 10 sessions through the end of last week, the PBOC fixed the dollar at a new multiyear low yesterday (CNY6.8579). It was set at CNY6.8589 today.
• The dollar jumped higher against the Indian rupee today and reached its best level since the record high was set near INR95.1250 on March 30. The central bank continues to develop a new fx regime for local banks. They will now have to report fx derivative contracts involving rupee positions by their related parties.
Other Markets
• Equities are mixed. Most of the large bourses in the Asia Pacific region fell. Japan’s Nikkei 400 and Topix advanced, as did South Korea’s Kospi, but they were the exceptions. Europe’s Stoxx 600 is little changed but firmer after falling for the past two sessions. US index futures are softer. The Dow and S&P futures are off about 0.25% while Nasdaq futures are down about 0.65%.
• Benchmark 10-year yields continue to rise. European rates are mostly 2-4 bp higher. The 10-year Treasury yield is up a little more than one basis point to poke above 4.35%. Yesterday’s two coupon auctions by the Treasury produced small tails. Today, $44 bln seven-year notes will be sold as will $30 bln two-year floating rate notes.
• Gold and silver are weaker. Gold is trading a new three-week low but is holding above $4600. Silver steadied after falling to a two-week low slightly below $72.75.
• June WTI is knocking on $100. It is at its best level since April 7.
Data
• The US sees February house prices as the two-day FOMC meeting, and Powell’s last as chair, gets underway. April Richmond and Dallas Fed surveys and the Conference Board’s consumer confidence are also on tap. Tomorrow brings March goods trade; housing starts and durable goods orders ahead of the outcome of the FOMC meeting.
• To no one’s surprise, the ECB’s survey showed a rise in inflation expectations. The one-year projection jumped to 4.0% from 2.5%, matching the highest since September 2023. The three-year projection edged up to 3.0% from 2.5%. That matches the highest since October 2022.
• A firm inflation reading tomorrow will lend support to ideas that the Reserve Bank of Australia will hike rates next week for the third consecutive meeting. Officials typically put more weight on the quarterly than monthly estimate. The median forecast in Bloomberg’s survey is for a 1.4% quarter-over-quarter (Q1) increase after a 0.6% rise in Q4 25. The March reading is expected to have surged by around 1.4% as well, which would lift the year-over-year rate to around 4.8%. The trimmed mean versions will be more subdued. The futures market is discounting nearly 80% chance of a hike next week.
• The Bank of Japan was the first of five G10 central banks to meet this week. The target rate remained at 0.75%. The updated forecasts cut growth and lifted inflation projections. This year’s growth projection was reduced to 0.5% from 1.0%. Next year’s growth forecast was shaved to 0.7% from 0.8%. The CPI forecast was lifted to 2.8% this year from 1.9% and 2.3% next year from 2.0%.
Reviewed by Marc Chandler
on
April 28, 2026
Rating:
