The US dollar remains under pressure, reaching new lows against the euro, British pound, and Norwegian krone. It has weakened against most G10 currencies, except for the Japanese yen, which has been affected by disappointing economic data and political uncertainty. Support for Prime Minister Ishida has dropped significantly following his admission of financial misconduct, creating an unfavorable backdrop for the upcoming July elections. Meanwhile, emerging market currencies are gaining strength. Investors remain focused on US economic indicators, including housing starts and industrial production, which could provide insights into whether the economy is facing a contraction.

Asia Pacific Markets

The Japanese yen is under strain as the US dollar nears the 150.00 level. Economic data showed a decline in Japan’s services sector, while industrial output continued to fall, raising concerns about the country's economic trajectory. The Bank of Japan is unlikely to alter its policy in the upcoming meeting, with a possible interest rate hike being pushed to later in the year.
In China, the yuan is hovering near recent lows, with the central bank maintaining stability through its exchange rate settings. Despite Beijing's opposition to a major port deal involving Hong Kong’s CK Hutchinson and BlackRock, no regulatory decision has been made yet.

European Markets

The euro is showing strength, reaching a five-month high, with investors targeting the $1.10 mark. Market confidence has been boosted by Germany’s recent political agreement on fiscal measures, which has helped lift investor and consumer sentiment. Economic data suggests that Germany's business outlook has been improving since early 2024.
The British pound briefly surpassed the $1.30 level before facing resistance. Market participants are looking ahead to the UK’s labor market report and the Bank of England’s upcoming meeting. While no immediate rate cuts are expected, investors anticipate a potential policy shift by May.

American Markets

The US Dollar Index is testing key support levels, trading near its lowest point since mid-October 2024. The dollar remains under pressure, particularly in European trading sessions. Reports suggest that investors who bought record amounts of US equities last year are now unwinding positions, leading to dollar weakness. A break below the 103.00 level could signal further downside. Economic reports on housing starts, permits, and industrial production may provide clarity on growth concerns. Meanwhile, import and export prices declined last month, indicating a mixed inflation outlook.