Currency Market Overview - The dollar index (DXY00) reached a 2-week high, increasing by +0.35%, supported by safe-haven demand due to concerns over a prolonged Iran conflict following President Trump's comments about seizing Iranian oil [1] - The dollar's gains are limited by a decline in T-note yields, which has weakened interest-rate differentials [1] Interest Rate Expectations - Swaps markets are pricing in a 3% probability of a +25 basis point rate hike at the upcoming FOMC meeting on April 28-29 [2] - The FOMC is expected to cut interest rates by at least -25 basis points in 2026, while the Bank of Japan (BOJ) and European Central Bank (ECB) are anticipated to raise rates by at least +25 basis points in the same year [3] Eurozone Economic Indicators - The EUR/USD pair fell to a 1-week low, down by -0.42%, pressured by a stronger dollar and a decline in the Eurozone's March economic sentiment index, which fell to a 6-month low of 96.6, below expectations [4][5] - German March CPI rose by +1.2% month-on-month and +2.8% year-on-year, marking the largest year-on-year increase in two years, which is a hawkish signal for ECB policy [5] Japanese Yen Performance - The USD/JPY pair decreased by -0.46%, with the yen recovering from a 1.75-year low against the dollar due to comments from Japan's currency officials indicating potential bold actions in foreign exchange markets [6] - BOJ Governor Kazuo Ueda's remarks about closely monitoring currency movements contributed to the yen's gains, alongside falling T-note yields [6]

Economic Indicators - The US MBA mortgage applications fell by 10.5% in the week ended March 20, with the mortgage purchase sub-index down by 5.4% and the refinancing mortgage sub-index down by 14.6% [3] - The average 30-year fixed-rate mortgage increased by 13 basis points to 6.43% from 6.30% the prior week [3] - The US February import price index excluding petroleum rose by 1.2% month-over-month, marking the largest increase in four years, surpassing expectations of 0.4% [3] Currency Market Dynamics - The dollar index (DXY00) increased by 0.02% after recovering from early losses, influenced by Iran's rejection of the US peace proposal and hawkish US economic news [1] - The dollar initially declined as stocks rallied following the Trump administration's peace proposal to Iran, while a 3% drop in crude oil prices may ease price pressures, potentially allowing the Fed to continue cutting interest rates [2] - The dollar is facing downward pressure due to a poor outlook for interest rate differentials, with expectations of a 25 basis point rate cut by the FOMC in 2026, while the BOJ and ECB are anticipated to raise rates by at least 25 basis points in the same year [4] Eurozone Economic Sentiment - The EUR/USD pair decreased by 0.26%, with the euro under pressure as business confidence in Germany fell, indicated by the German March IFO business climate dropping to a 13-month low of 86.4 [5] - ECB President Lagarde stated it is premature to determine the response to the war, suggesting that the initial shock may be smaller than in 2022 due to a more favorable macroeconomic environment [6]

Group 1: Dollar Index and Economic Indicators - The dollar index (DXY00) rose by +0.42% on Tuesday, driven by safe-haven demand due to the ongoing war with Iran and a +4% increase in crude oil prices, which may lead to inflation and prompt the Fed to tighten monetary policy [1] - The US Q4 nonfarm productivity remained unchanged at +1.8%, while Q4 unit labor costs were revised upward to +4.4% from +2.8%, exceeding expectations of +3.6% [3] - The Mar S&P manufacturing PMI for the US unexpectedly increased to 52.4, stronger than the anticipated decline to 51.5 [3] Group 2: Eurozone Economic Conditions - The euro (EUR/USD) fell by -0.20% on Tuesday, pressured by a stronger dollar and the negative impact of rising crude oil prices on the Eurozone economy [5] - The Eurozone Mar S&P manufacturing PMI unexpectedly rose by +0.6 to 51.4, surpassing expectations of a decline to 49.6, marking the strongest pace of expansion in 3.75 years [6] - The Mar S&P composite PMI for the Eurozone fell by -1.4 to a 10-month low of 50.5, which was weaker than the expected 51.0 [6] Group 3: Interest Rate Outlook - The dollar's gains are tempered by a poor outlook for interest rate differentials, with expectations that the FOMC will cut interest rates by at least -25 basis points in 2026, while the BOJ and ECB are anticipated to raise rates by at least +25 basis points in the same year [4]

Economic Indicators - The US Q4 nonfarm productivity remained unchanged at +1.8%, while unit labor costs were revised upward to +4.4% from a previous estimate of +2.8%, exceeding expectations of +3.6% [2] - The US March Richmond Fed manufacturing survey of current conditions increased by +10 to a 13-month high of 0, surpassing expectations of a decline to -8 [3] - The Eurozone March S&P manufacturing PMI unexpectedly rose by +0.6 to 51.4, stronger than the anticipated decline to 49.6, marking the fastest pace of expansion in 3.75 years [6] Currency Movements - The dollar index (DXY00) increased by +0.38%, driven by safe-haven demand amid the ongoing war with Iran and a +3% rise in crude oil prices, which may lead to inflation and prompt the Fed to tighten monetary policy [1] - The EUR/USD pair decreased by -0.19% due to a stronger dollar and the negative impact of rising crude oil prices on the Eurozone economy [5] Central Bank Outlook - The FOMC is expected to cut interest rates by at least -25 basis points in 2026, while the Bank of Japan (BOJ) and European Central Bank (ECB) are anticipated to raise rates by at least +25 basis points in the same year [4] - There is a 71% chance of a +25 basis point rate hike by the ECB at the upcoming April 30 policy meeting, as indicated by swaps markets [7]

Economic Indicators - The US February Chicago Fed National Activity Index fell by -0.31 to -0.11, which was weaker than the expected increase to 0.16 [2] - US January construction spending unexpectedly decreased by -0.3% month-over-month, contrary to expectations of a +0.1% increase [3] Currency Movements - The dollar index (DXY) declined to a 1.5-week low, finishing down by -0.65%, as stocks rallied following President Trump's postponement of attacks on Iranian energy infrastructure [1] - The euro (EUR/USD) recovered from overnight losses, rising to a 1.5-week high and finishing up by +0.44%, driven by the dollar's decline and a significant drop in crude oil prices [4] Central Bank Outlook - The swaps market is pricing in an 8% chance of a +25 basis point rate hike at the upcoming FOMC meeting on April 28-29, with expectations of a -25 basis point cut by 2026 [3] - The ECB is anticipated to raise rates by at least +25 basis points in 2026, with a 68% chance of a +25 basis point hike at the April 30 policy meeting [6] - ECB Governing Council member Peter Kazimir indicated that the ECB may act forcefully if inflation risks remain above target for an extended period [5]

Core Viewpoint - The dollar index has declined due to a combination of geopolitical developments and disappointing economic data, leading to reduced demand for the dollar [1]. Economic Indicators - The US February Chicago Fed National Activity Index decreased by -0.31 to -0.11, falling short of expectations of 0.16 [2]. - US January construction spending unexpectedly fell by -0.3% month-over-month, contrary to expectations of a +0.1% increase [3]. Currency Movements - The euro (EUR/USD) increased by +0.48%, reaching a 1.5-week high as the dollar weakened following President Trump's postponement of military actions against Iran [4]. - The yen (USD/JPY) decreased by -0.62%, recovering as crude oil prices fell and labor unions in Japan reported average pay increases above 5% for the third consecutive year, which may influence the Bank of Japan's interest rate decisions [6]. Central Bank Outlook - The swaps market indicates an 8% probability of a +25 basis point rate hike by the Federal Open Market Committee (FOMC) at the upcoming April meeting, with expectations of a rate cut of at least -25 basis points by 2026 [3]. - The European Central Bank (ECB) is perceived to have a 65% chance of a +25 basis point rate hike at the April 30 policy meeting, as officials express concern over prolonged inflation above target levels [5].

Core Insights - The dollar index fell by -0.75% due to a rally in the British pound, euro, and Japanese yen following hawkish comments from central banks regarding inflationary pressures from rising energy prices related to the war in Iran [1] - US economic indicators showed mixed signals, with a drop in new home sales and a decrease in weekly jobless claims, suggesting a stronger labor market [2][3] Group 1: Currency Movements - The euro rose by +1.40% to a one-week high, supported by a weaker dollar and increasing European bond yields, particularly the 10-year German Bund yield reaching a 2.25-year high of 3.011% [5] - The dollar's decline was influenced by expectations of interest rate cuts by the FOMC in 2026, while the BOJ and ECB are anticipated to raise rates [4] Group 2: Economic Indicators - US weekly initial unemployment claims fell by -8,000 to a nine-week low of 205,000, contrary to expectations of an increase [3] - The Philadelphia Fed business outlook survey for March unexpectedly rose by +1.8 to a six-month high of 18.1, surpassing expectations of a decline [3] - January new home sales in the US decreased by -17.6% month-over-month to a 3.25-year low of 587,000, falling short of expectations [3] Group 3: Central Bank Actions - The swaps market is pricing in a 6% chance of a +25 basis point rate hike at the upcoming FOMC meeting [4] - The ECB has cut its 2026 Eurozone GDP forecast while raising its inflation forecast, which may negatively impact the euro [6] - A surge in European natural gas prices to a three-year high poses a bearish outlook for the euro and the Eurozone economy, which is heavily reliant on energy imports [6]

Currency Market Overview - The dollar index (DXY00) is down by -0.45% due to a rally in the British pound, euro, and Japanese yen following hawkish comments from the BOE, ECB, and BOJ regarding inflation driven by rising energy prices from the Iran conflict [1] - The dollar's losses are somewhat limited as stock market weakness has increased liquidity demand for the dollar, supported by hawkish US economic news on jobless claims and the Philadelphia Fed business outlook survey [2] Economic Indicators - US weekly initial unemployment claims fell by -8,000 to a 9-week low of 205,000, indicating a stronger labor market than the expected increase to 215,000 [3] - The Philadelphia Fed business outlook survey rose unexpectedly by +1.8 to a 6-month high of 18.1, contrary to expectations of a decline to 8.0 [3] - US January new home sales decreased by -17.6% month-over-month to a 3.25-year low of 587,000, which was weaker than the expected figure of 722,000 [3] Interest Rate Expectations - Swaps markets are pricing in a 6% chance of a +25 basis point rate hike at the upcoming FOMC meeting on April 28-29, with expectations that the FOMC will cut rates by at least -25 basis points in 2026, while the BOJ and ECB are anticipated to raise rates by at least +25 basis points in the same year [4] Euro Performance - The euro (EUR/USD) is up by +0.47% amid a weaker dollar and rising European bond yields, with the 10-year German Bund yield reaching a 2.25-year high of 3.011% [5] - The euro faced some setbacks after the ECB cut its 2026 Eurozone GDP forecast while raising its inflation forecast, compounded by a surge in European natural gas prices to a 3-year high, which poses risks to the Eurozone economy reliant on energy imports [6]

Economic Indicators - The US February Producer Price Index (PPI) final demand rose by +0.7% month-over-month and +3.4% year-over-year, exceeding expectations of +0.3% month-over-month and +3.0% year-over-year [2] - The PPI excluding food and energy increased by +0.5% month-over-month and +3.9% year-over-year, also stronger than the anticipated +0.3% month-over-month and +3.7% year-over-year, marking the largest year-on-year increase in 13 months [2] Federal Reserve Actions - The Federal Open Market Committee (FOMC) voted 11-1 to maintain the federal funds target range at 3.50% to 3.75%, indicating solid economic activity and elevated inflation [3] - The FOMC raised its 2026 US GDP forecast to 2.4% from 2.3% and increased its core Personal Consumption Expenditures (PCE) projection for 2026 to 2.7% from 2.5% [3] - The FOMC kept its year-end 2026 federal funds rate projection at 3.375%, suggesting a potential interest rate cut of 25 basis points this year [4] Currency Market Dynamics - The dollar index rose by +0.51% as it recovered from early losses, driven by stronger-than-expected PPI data and geopolitical tensions in the Middle East [1] - The euro fell by -0.57% as the dollar strengthened, influenced by the hawkish US PPI report and rising crude oil prices due to escalating tensions in the Iran conflict [6] - The outlook for interest rate differentials remains poor for the dollar, with expectations of a rate cut by the FOMC while other central banks like the Bank of Japan (BOJ) and European Central Bank (ECB) are anticipated to raise rates [5]

Economic Indicators - The US February Producer Price Index (PPI) for final demand rose by +0.7% month-over-month and +3.4% year-over-year, exceeding expectations of +0.3% month-over-month and +3.0% year-over-year [2] - The PPI excluding food and energy increased by +0.5% month-over-month and +3.9% year-over-year, also stronger than the anticipated +0.3% month-over-month and +3.7% year-over-year, marking the largest year-on-year increase in 13 months [2] Federal Reserve Policy - The Federal Open Market Committee (FOMC) is expected to maintain the federal funds target range at 3.50%-3.75% during its upcoming meeting, with market expectations indicating a 0% chance of a -25 basis point rate cut [3] - The core Personal Consumption Expenditures (PCE) price index stands at 3.1%, significantly above the Fed's 2.0% target, suggesting a potential extended pause in rate adjustments [3] Currency Market Dynamics - The dollar index (DXY) increased by +0.30% as it recovered from early losses, driven by the stronger-than-expected PPI data and geopolitical tensions in the Middle East [1] - The euro (EUR/USD) declined by -0.30% as the dollar strengthened, influenced by the hawkish PPI report and rising crude oil prices due to escalating tensions in the Iran conflict [5] Interest Rate Expectations - Market swaps are pricing in a 3% chance of a +25 basis point rate hike by the European Central Bank (ECB) at its upcoming policy meeting [6] - The outlook for interest rate differentials remains unfavorable for the dollar, with expectations of a -25 basis point cut by the FOMC in 2026, while the Bank of Japan (BOJ) and ECB are anticipated to raise rates by at least +25 basis points in the same year [4]