North American participants shrugged off the pessimism seen in Asia Pacific and Europe yesterday after the US-Iran negotiations broke down over the weekend. The optimism was contagious and reports that another round of negotiations are being contemplated during the ceasefire that expires next week. The dollar is broadly weaker. Global equities and bonds have rallied today and crude oil is softer.
Today’s highlights include a much smaller than expected March Chinese trade surplus and tightening by the Monetary Authority of Singapore. The US earnings reporting season continues, and the World Bank-IMF meetings get underway. At least five Federal Reserve officials speak today and the US reports March PPI. In byelections yesterday, the Liberal Party in Canada picked up two seats, giving Prime Minister Carney a parliamentary majority.
Prices
G10
• The knee-jerk risk-off expressed in Asia Pacific trading took the euro slightly below $1.1660 early yesterday, about a fifth of a cent below the pre-weekend low. After consolidating in Europe, the North American session bid the euro to new session highs near $1.1765. It recorded an ostensibly bullish outside up day and posted its highest close since the war began. Follow-through buying today carried the single currency to almost $1.18. The $1.1800-25 area offers the next important hurdle. The day before the war began, the euro settled slightly above $1.1810. Options for about 1.3 bln euros at $1.18 expire tomorrow.
• The dollar gapped higher against the yen yesterday and reached JPY159.85 before the buying dried up. The dollar reversed lower in North American dealing, closed the cap, and left a potentially bearish shoot star candlestick in its wake. New session lows were made in late North American activity, near JPY159.30. The greenback has been sold to JPY158.85 today, where options for $1.24 bln expire today. Still, additional losses look likely. The next area of support may be around JPY158.60.
• Sterling posted a big outside up day yesterday. Like the euro, it traded on both sides of last Friday’s range and settled above its high. On the day before the war began, sterling settled slightly above $1.3480. It settled above there yesterday. Sterling has advanced to $1.3550 today. The $1.3515 area corresponds to the halfway point of decline from the late January high (~$1.3870) to the end of March low (~$1.3160). The next retracement target is near $1.3600.
• Risk-off initially lifted the greenback to a new three-day high against the Canadian dollar (~CAD1.3880), but the North American participants seemed to put more weight on reports that a US-Iran deal was close encouraged a move into risk assets. US stocks recovered from initial losses and the greenback weakened. It fell through and settled below CAD1.3800 and confirmed the outside down day. It has approached the next technical target around CAD1.3750. A break could spur another leg lower toward CAD1.3700.
• The Australian dollar also posted a bullish outside up day. It initially was sold to a three-day low near $0.6985 and recovered to poke slightly above $0.7100 for the first time since March 19. It has risen slightly above $0.7120 today, which leaves little on the charts to deter a retest of the high since June 2022 seen a month ago (~$0.7185). Options for A$1.35 bln at $0.7125 expire tomorrow.
EM
• The Mexican peso gained as risk appetites returned in North America. Initially, the dollar rose to MXN17.4435 but turned lower to trade below MXN17.30. Last Friday’s low was near MXN17.25. It has edged closer today. The roughly two-year low was recorded in mid-February near MXN17.0865. We suspect the low for H1 26 is not yet in place.
• The dollar posted an outside down day against the offshore yuan. The dollar reversed lower after reaching about CNH6.8435. It fell to nearly CNH6.8165 and extended to almost CNH6.81 today, a new three-year low. A break of CNH6.80 could target the CNH6.70 area. The PBOC had set the dollar’s reference rate a little high in the past two sessions, but broadly heavier greenback saw it cut the rate today. It was set at CNY6.8593, a new three-year low (CNY6.8657 yesterday and CNY6.8854 last Tuesday).
• Indian markets were closed for a national holiday today.
Other Markets
• Equities are higher today. Japan’s Nikkei, Taiwan’s Taiex, and South Korea’s Kospi rallied more than 2% today. Even Singapore’s Strait Times advanced despite the Monetary Authority of Singapore tightening policy. New Zealand and the Philippines were notable exceptions, unable to make headway. Europe’s Stoxx 600 is about 0.60% higher after slipping about 0.15% yesterday. US index futures are firm, with Nasdaq futures up about 0.35%.
• Benchmark 10-year yields are lower. The 10-year JGB yield fell nearly four basis points, encouraged in part by the strongest reception to the 20-year bond auction since 2019. European yields are mostly 3-6 bp lower. The 10-year US Treasury yield is off a little more than one basis point to 4.28%.
• Gold has extended yesterday’s recovery. It approached $4800 today. It has not settled above there since March 19. Silver is trading near its best level since March 18.
• May WTI peaked yesterday near $105.65 and settled near $99. It has fallen to almost $95 today, near last Thursday and Friday’s lows.
Data
• US March producer prices are expected to have jumped 1.1% in March after a 0.7% increase in February. That would lift the headline pace to 4.6% from 3.4%. As we saw in with last week’s CPI, the core rate is expected to be more subdued. The median forecast in Bloomberg’s survey is for a 0.4% month-over-month increase (0.5% in February) for a 4.1% rise year-over-year (3.9% in February). Several Fed officials speak throughout the day (Goolsbee, Barr, Paulson, Collins, and Barkin).
• Japan confirmed that after industrial output surged 4.3% in January, the most since June 2022, it pulled back 2.0% in February. The year-over-year rate is at 0.4%. It has not been above 1% since last September. Japan’s economy grew by 1.3% at an annualized pace in Q4 25 and looks to have expanded by around the same pace in Q1 26. It will not be reported until May 19. The swaps market is discounting about 35% chance of a rate hike later this month. It was closer to 55% before the weekend. BOJ Governor Ueda is in Washington this week. His comments, read by a deputy yesterday, seemed to emphasize the uncertainty injected by the Middle East war. It was far shy of clear signal, which the market expects before a hike.
• China reported a trade surplus half of what was expected in Bloomberg’s survey. The $51.1 bln March trade surplus compares with $91 bln in February and almost $102 bln in March 2025. That means that that Q1 surplus was almost $265 bln. The surplus in Q1 25 was about $271 bln. In dollar terms, exports rose 2.5% year-over-year, while imports rose by 27.8%. Beijing reports Q1 GDP at the end of the week. The median forecast in Bloomberg’s survey is for a 1.4% quarter-over-quarter increase in output, up from 1.2% in Q4 25. The much smaller than expected trade surplus could signal weaker growth.
Reviewed by Marc Chandler
on
April 14, 2026
Rating:
