The US dollar is slightly lower against all major currencies today. The buck is currently the weakest against the Japanese yen, the Australian dollar and the euro. While the dollar surged earlier this week, the rally ran out of steam yesterday (the last trading day of the first quarter). As most major markets are closed for Good Friday, currency trading volumes are fairly thin today. Many "risk-on" assets (such as technology stocks and high-beta currencies) also did well yesterday, suggesting that quarter-end flows were focused on selling safe havens and buying riskier assets.
Turning to news, President Trump said he may "hold up" a major trade deal with South Korea in order to apply pressure on North Korea. According to Trump, "Because it's a very strong card, and I want to make sure everyone is treated fairly." It is not clear how the trade deal with South Korea is related to North Korean peace talks. President Trump has tweeted that he is hopeful for the denuclearization of North Korea. Our short-term outlook on the dollar is neutral, while our medium-term outlook remains bearish.
USD/JPY is down slightly today and currently trading above 106.10. EUR/USD is up slightly and trading above 1.2320. The pound is flat, and GBP/USD is currently above 1.4040.
Looking at US economic data this week, we'll see personal consumption expenditures and the second-take of Q4 GDP growth. The Chicago Fed national activity index (0.88 vs. 0.19 expected) beat expectations. FOMC member Mester stated that the threat of a trade war is a risk despite the sunny economic outlook. S&P/Case-Shiller home prices (6.4% vs. 6.2% expected) beat expectations. The Fed's Bostic did not address monetary policy. The final take of Q4 GDP growth (2.9% vs. 2.7% expected) was ahead of estimates while Q4 personal consumption expenditures (2.7%) met estimates. February pending home sales (-4.4% vs. -0.2%) missed expectations. On Wednesday, the Fed's Bostic said that interest rates should rise towards their neutral rate. Core personal consumption expenditures for February (1.6%) met expectations, while initial jobless claims (215k vs. 230k expected) were better than expected. Consumer confidence (101.4 vs. 102 expected) and Chicago PMIs (57.4 vs. 62 expected) were both worse than expected. The FOMC's Harker upgraded his outlook, and sees three hikes this year on stronger inflation. Last week, Fed Chair Jerome Powell raised rates by 0.25% while suggesting that future policy will be determined based on incoming data.