The US dollar has regained strength today, showing gains against all major G10 currencies. This rebound is largely attributed to reports suggesting President Trump may soon announce a rollback of tariffs on imported auto parts and exempt US-made vehicles from aluminum and steel duties. Despite a minority government result in Canada’s recent election, the Canadian dollar is performing relatively well. Meanwhile, traditional safe-haven currencies like the yen and Swiss franc are under pressure, possibly reflecting improved investor sentiment. Emerging market currencies present a mixed picture, with Asia Pacific currencies like the yuan showing resilience, while some Central European currencies are facing downward pressure.

Asia Pacific Markets

In Asia Pacific, the Japanese yen weakened as the dollar recovered from recent losses, climbing back toward JPY142.70 after touching a three-day low. Last week’s key support sits just under JPY140, while any upside momentum must overcome resistance near JPY144. Japanese economic data due soon, including retail sales and industrial production, are expected to confirm a sluggish first quarter.
In Australia, the local dollar tested new highs not seen since November, reaching just below $0.6450 before pulling back. The market is watching upcoming CPI data closely, with expectations for a slight softening. Despite this, rate cut expectations remain high, with futures pricing in over 100 basis points of easing by the Reserve Bank of Australia.

European Markets

The euro briefly rose above $1.1400 before pulling back toward $1.1375, remaining within a familiar trading range. While ECB inflation expectations have edged higher, the market still expects a rate cut in June. Notably, Europe may have outpaced the US in first-quarter growth for the first time in nearly three years, despite modest gains.
In the UK, the pound hit a new yearly high near $1.3445 after its biggest rally in two weeks. It held steady above $1.3400 today, boosted by continued strength against the euro. With little key data ahead, attention turns to local elections, where the Reform Party could emerge as a major winner.

American Markets

After falling to a three-day low near 98.95, the Dollar Index has recovered and is now consolidating near 99.30. However, a break above the 100.00 mark is needed for a meaningful technical shift. Positive sentiment around potential tariff relief for the auto sector has helped support the dollar. Today’s economic releases, including trade, housing, and labor market data, are not expected to significantly change the market's outlook. While survey-based indicators have weakened, officials note that the broader real economy remains relatively stable. That said, early signs point to stagnating growth and slowing job creation. Supply chain disruptions, particularly from falling container traffic from China, are beginning to impact US inventory levels and could spread across regions in the coming weeks.