The US dollar was mixed to start the week, with price action largely shaped by renewed tariff headlines and a risk-off tone. Uncertainty/Confusion for companies and countries are the code words for the day.
President Trump raised the blanket tariff rate to 15% from 10% over the weekend and warned of even higher rates for countries challenging the recent Supreme Court decision.
Fed Governor Waller described the March FOMC decision as a “coin flip,” reinforcing the data-dependent outlook.
The Dollar Index traded roughly flat with an overall decline of -0.08% but there was divergent moves for the major currency pairs. .
JPY outperformed, benefiting from risk-off flows in sympathy with the stock markets declines, particularly in tech and AI-related names. The USDJPY is trading down -0.23% on the day (USD lower, JPY higher).
In contrast, activity and commodity currencies lagged. The AUD and NZD underperforming and the CAD also lower vs the greenback. Those pairs were pressured by the sentiment. Australia CPI will be released tomorrow after the close with the expectations for YoY inflation to decline to 3.7% from 3.8%> The RBA at the last meeting raised rates by 25 basis points.
In Europe, EUR, GBP, and CHF posted modest gains versus the dollar. The euro found support after stronger-than-expected German Ifo data, though trade-related uncertainty remains elevated. ECB President Lagarde reiterated that policy decisions will remain meeting-by-meeting and that completing her term remains her baseline.
Sterling was steady after BoE commentary suggested rates may still be above neutral.
Snapshot of G10 moves:
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EURUSD: modestly higher near 1.1790
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USDJPY: lower near 154.70 (yen strongest G10)
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GBPUSD: slightly higher near 1.3488
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USDCHF: lower near 0.7741
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USDCAD: CAD marginally lower (-0.18%) near 1.3698
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AUDUSD: AUD softer by -0.38% near 0.7055
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NZDUSD: Fell by -0.35% near 0.5954
Overall, today’s FX trade reflects risk sensitivity and tariff uncertainty, with defensive currencies outperforming and high-beta currencies lagging.
US stocks fell:
- Dow industrial average fell by -821.91 point or -1.66% at 48,804.06 points.
- S&P index -71.76 points or -1.04% at 6837.75.
- NASDAQ index -258.80 point or -1.13% at 22627.27
A bright spot is US yields fell among the uncertainty and risk off flows:
- 2 year yields 3.440%, -4.0 basis points
- 5 year yield 3.585%, -6.2 basis points
- 10 year yield 4.032%, -5.2 basis points
- 30 year yield 4.702%, -2.3 basis points.
