Investors are finding reassurance in recent signals from senior US officials, who appear to have softened the stance on proposed reciprocal and sectoral tariffs. While uncertainties remain within the administration’s economic policies, this shift has eased some concerns. The US dollar, after recent gains, has started the new week on a softer note against major G10 currencies, particularly the Japanese yen. Japan's composite PMI saw a significant decline, a rare event that moved markets. Meanwhile, US Treasury yields are strengthening, with the 10-year yield reaching its highest level in a week at around 4.28%. Emerging market currencies are showing mixed performances, with the Indian rupee gaining 0.45% while the Turkish lira posted a 0.5% loss. Equity markets are also mostly in positive territory, with European indices rebounding and US futures rising by over 1%.

Asia Pacific Markets

The Japanese yen experienced a second consecutive weekly decline against the US dollar, with the currency struggling to maintain levels below JPY150. While market momentum suggests potential movement toward JPY151.65-80, Japan’s economic data, including weak industrial production and declining household spending, remain concerning. Additionally, the country’s composite PMI fell to 48.5, its lowest level since early 2022.
Meanwhile, the Chinese yuan has shown signs of stability, with the dollar finding support around CNH7.2200.

European Markets

The euro dipped briefly below $1.08 but quickly rebounded, indicating limited selling pressure. The European economy has shown signs of gradual improvement, with the composite PMI rising to 50.4 in March. However, the manufacturing sector remains weak, with Germany maintaining a steady PMI above 50, while France continues to struggle, seeing its PMI fall as low as 45.1 before a slight recovery.
The British pound faced downward pressure, dropping below $1.29 for the first time in weeks, though it managed a recovery toward $1.2960. The UK’s composite PMI strengthened to 52.0, the highest level since Q3 2024. The upcoming release of CPI data and retail sales figures, along with fiscal policy updates, could influence market direction in the near term.

American Markets

The US dollar index recently reached a two-and-a-half-week high, closing above 104.00. Market sentiment suggests the currency is forming a base, with potential movement toward the 104.90-105.00 range if further buying materializes. However, business and consumer confidence remain fragile, with recent Fed surveys indicating a weakening trend. Fed Chair Jerome Powell has downplayed these survey results, emphasizing the resilience of real-sector data. The preliminary March PMI report is expected to provide further insights, particularly as quarter-end approaches. Investors remain cautious amid uncertainties surrounding upcoming US tariff decisions and their potential economic implications.