The US dollar is showing mild weakness against most G10 currencies today, but it continues to trade within the same boundaries as Wednesday. The Japanese yen stands out by reaching a weekly high, despite disappointing first-quarter GDP figures. Emerging market currencies are generally stronger. Markets largely ignored a statement from former President Trump indicating that, due to limited negotiation capacity, the US will soon unilaterally determine new tariff rates within the next few weeks. Meanwhile, equities in Europe are gaining, and US futures are modestly higher, while bond markets are seeing a rally with yields notably falling.

Asia Pacific Markets

The Japanese yen strengthened over the week, reversing gains in the US dollar, which had peaked at JPY148.65 on Monday. By today, the greenback dipped below JPY145.00, despite Japan reporting a GDP contraction of 0.2% in Q1, largely driven by weak exports. Business investment, however, increased.
The Australian dollar was unable to hold gains above $0.6500 earlier this week and dropped below $0.6390 before recovering to around $0.6435. Indicators point to more weakness, and traders are anticipating a rate cut by the Reserve Bank of Australia next week, with additional cuts expected later in the year.

European Markets

The euro remained within a narrow two-cent band this week, mostly orbiting around the $1.12 level, where a large number of options expire today. The eurozone’s trade surplus grew to €36.8 billion in March, an increase from February, helping the region log a Q1 surplus of €61.6 billion.
Meanwhile, the British pound remains in a tight range as well. It has not managed to breach the downtrend line near $1.3360. UK GDP for Q1 came in stronger than forecast at 0.7%, the best since Q1 2024, but fading momentum suggests limited economic expansion going into Q2.

American Markets

The Dollar Index is trading quietly between 100.50 and 100.80, remaining within Wednesday’s broader range. Today’s US economic data—housing starts, permits, and surveys—are not expected to significantly impact markets. Still, attention is on consumer sentiment and inflation expectations, particularly with recent CPI and PPI readings indicating weaker price pressure. Weak April retail sales and manufacturing output have revived expectations for a Federal Reserve rate cut this year, though markets are now pricing in fewer cuts than a week ago. Despite concerns over capital flight, March saw a significant $98 billion net inflow into the US.