The US dollar is currently mixed. The currency is mostly flat against its largest peers including the euro and the British pound. However, the buck is weakening against the Australian dollar. Yesterday, the dollar strengthened by a significant degree alongside rising US Treasury yields. Thanks to high hopes for Q1 corporate earnings, investors bought equities while selling safe haven assets such as US government bonds and gold.
Turning to recent news, the Wall Street Journal (paywall) is reporting that the White House is planning to release details its next set of tariffs on $100b worth of Chinese imports. According to the story, the Trump administration is increasingly confident in its approach after "China basically surrendered" (according to a person familiar with White House views). Reactions in markets have been relatively limited following the news. The US dollar is currently slightly weaker against the Japanese yen, while the Australian dollar continues to strengthen. In recent history, reactions to news during Asian trading hours have been limited, with larger movements occurring during European and US hours. Our short-term outlook on the dollar is neutral, while our medium-term outlook remains bearish.
USD/JPY is up slightly today and currently trading above 107.40. EUR/USD is flat and trading above 1.2330. The pound is flat, and GBP/USD is currently above 1.4230.
Looking at US economic data this week, traders will be watching inflation data. The producer price index for March (3% vs. 2.9% expected) accelerated above estimates. The YoY consumer price index for March (2.4%) met consensus estimates. Fed policymakers believe that inflation is likely to keep accelerating according to March FOMC minutes. Initial jobless claims (233k vs. 230k expected) were slightly worse than consensus estimates. Later today, we'll hear speeches from Fed members including Bullard, Rosengren and Kaplan. We'll also see consumer sentiment figures for March. Last week, non-farm payrolls figures missed expectations by a wide margin.