The Russian ruble weakened to 85 per USD from the near two-year high of 81.7 touched on March 18th as investors reconsidered the feasability of the US enabling Russia in returning to global financial markets. President Putin refrained from agreeing to all concessions suggested by the US in a ceasefire deal after a call with US President Trump, limiting previous hopes that a deal could introduce peace with Ukraine. Consequently, investors trimmed their previous rush onto Russian securities on hopes that the US would reintroduce Russian assets to global financial markets amid their signals of restoring economic ties with Moscow. Additionally, the ruble was also pressured by caution that the Kremlin may continue to relax capital controls to weaken the currency, as the decline in energy prices magnify the scarcity of budget revenues that come with a stronger ruble. On the policy front, the CBR held its policy rate at 21%, as expected, and stuck a more optimistic tone on disinflation.

Russian Ruble Pulls Back from Rally

The offshore yuan depreciated past 7.25 per dollar on Friday, hitting its lowest level in over a week, mainly due to a strengthening US dollar. The greenback's appreciation was buoyed by remarks from Fed Chair Powell, who indicated that the central bank is in no rush to cut interest rates. Adding further pressure on the yuan, the People's Bank of China scaled back its support for the currency through its daily midpoint fixings, signaling its intention to curb any sharp or rapid depreciation against the US dollar. On the monetary policy front, the PBOC kept its key lending rates unchanged for the fifth consecutive month in March 2025, in line with market expectations. The one-year loan prime rate remained at 3.1%, while the five-year loan prime rate held steady at 3.6%. Both rates are at historic lows, following cuts in October and July of 2024. Still, the PBOC remarked that it will lower interest rates and adjust the bank’s reserve requirement ratio at the appropriate time.

Offshore Yuan Falls Amid Dollar Strength

The South Korean won continued its downward trend toward 1,470 per dollar, extending losses for the fourth straight session, pressured by rising domestic economic concerns and global trade uncertainties. Markets braced for the April 2 deadline for Trump's reciprocal tariffs on key trading partners, intensifying trade war concerns. A stronger dollar also added pressure after the Federal Reserve signaled no rush to cut interest rates further. Domestically, escalating political turmoil weighed on sentiment following the Democratic Party’s move to impeach acting President Choi Sang-Mok. Additionally, the Bank of Korea’s latest meeting minutes highlighted concerns about a potential economic slowdown and recently cautioned over market volatility due to US policy uncertainty. Meanwhile, the Acting President emphasized 24-hour monitoring to protect South Korea’s credit rating amid global shifts and potential US tariffs.

South Korean Won Slips for 4th Session

The New Zealand dollar held its recent decline to around $0.575 on Friday amid risk-off sentiment due to lingering trade war concerns. Investor caution persisted as U.S. President Donald Trump remained poised to implement reciprocal tariff against key trading partners on April 2. Further weighing on the Kiwi was a stronger U.S. dollar, which strengthened after the Federal Reserve indicated it was in no rush to cut interest rates further. Domestically, the currency failed to gain support from data showing New Zealand’s economy had climbed out of a recession, given significant pockets of weakness. Expectations for policy easing remain firm, with markets pricing in around 60bps of rate cuts—equivalent to two or three reductions—by year-end. Despite these headwinds, the New Zealand dollar is still heading for a modest weekly gain.

New Zealand Dollar Holds Decline

The Australian dollar weakened past $0.63 on Friday, sliding for the fourth straight session as caution dominated sentiment amid rising global economic and trade concerns. Markets braced for the April 2 deadline of US President Donald Trump’s reciprocal tariffs on countries that have imposed levies on US goods, intensifying trade war fears. Adding to the pressure, uncertainty surrounding the timing and scale of Beijing’s latest stimulus plan weighed on the Aussie, which is often used as a liquid proxy for the Chinese yuan due to Australia’s strong trade ties with China. Domestically, RBA Assistant Governor Sarah Hunter stated this week that February’s rate cut was intended to ease restrictive policy. However, she emphasized that the central bank remains more cautious than markets regarding further rate reductions. Expectations for the next RBA rate cut remain divided, with some analysts predicting a move as early as May, while others anticipate it in July or August.

Australian Dollar Falls on Risk Aversion

The Japanese yen slipped to around 149 per dollar on Friday, snapping a two-day advance as investors reacted to the latest inflation figures. Japan’s core inflation rate slowed to 3% in February from 3.2% in January but still exceeded forecasts of 2.9%. This marked the second consecutive month that inflation surpassed expectations, highlighting persistent price pressures and reinforcing the case for further interest rate hikes. Earlier this week, the Bank of Japan kept its policy rate steady at 0.5%, as widely anticipated. Policymakers maintained a cautious stance, opting to assess the impact of global economic risks, particularly higher US tariffs, on Japan’s economy. The BOJ also reiterated its commitment to closely monitoring foreign exchange markets and their influence on economic conditions and prices. Externally, the yen faced pressure from a strengthening dollar as concerns over global growth and trade tensions weighed on other major currencies, keeping investors cautious.

Japanese Yen Weakens After Inflation Data

The US dollar index held its recent advance to around 103.8 on Friday as investors continued to assess the Federal Reserve's monetary policy stance. On Wednesday, the Fed kept policy unchanged but signaled two interest rate cuts this year. The central bank also highlighted rising risks to growth, employment, and inflation in its latest economic projections. Meanwhile, Fed Chair Jerome Powell downplayed concerns over the inflationary impact of President Donald Trump’s tariffs, calling them “transitory,” but reiterated that the central bank is in no rush to cut rates further. Traders are also bracing for the April 2 deadline of Trump’s reciprocal tariffs on countries that have imposed levies on US goods. Moreover, the dollar strengthened as concerns over global growth and trade tensions weighed on other major currencies, keeping investors cautious.

Dollar Holds Gains as Markets Weigh Fed Outlook

The Canadian dollar strengthened past 1.43 per USD, retreating from a three-week high of 1.43 seen March 17th, due to escalating trade tensions, monetary policy divergence, and a dimming economic outlook. President Trump’s tariff threats on Canadian imports, alongside existing U.S. duties on steel and aluminum, have weakened investor sentiment, while the Bank of Canada’s recent rate cut to 2.75% has widened the interest rate gap with the Fed, driving capital outflows. The OECD downgraded Canada’s growth forecast to 0.7% for 2025 and 2026, reinforcing bearish sentiment as inflation rose to 2.6% in February, largely driven by cost-push factors from tariffs rather than economic strength. Meanwhile, futures and options markets indicate growing bets against the loonie, reflecting persistent downside risks.

Loonie Under Pressure Amid Tariff Uncertainty

The Mexican peso weakened to over 20.2 per USD, sliding from a four-month high reached on March 18th, as the US dollar rebounded, while looming tariff threats that cast a shadow on Mexico's growth prospects. The Organization for Economic Cooperation and Development warned that sustained US tariffs on Mexican products could trigger a recession, projecting a contraction of 1.3% in 2025 and 0.6% in 2026 if duties remain unchanged. Persistent trade uncertainties—exacerbated by President Trump’s protectionist policies—are unsettling investors ahead of critical domestic economic data, including Mexico’s economic activity index and mid-month inflation reports, while the market anxiously awaits the next policy move from the Bank of Mexico. Moreover, with the US Federal Reserve signaling further cuts amid rising inflation and a more fragile growth outlook, the peso’s demand outlook remains constrained by its close ties to the US economy.

Peso Under Pressure Amid Tariff Fears and Fed Cues

The Brazilian real weakened past 5.6 per USD in March, easing from its highest level since November 2024, as markets react to the Central Bank’s hawkish stance and its forward guidance, which now signal further interest rate hikes beyond the recent 100 basis point increase to 14.25%—a move intended to anchor inflation but one that has raised concerns about dampening economic growth. Investors are wary that the anticipated 50 basis point hikes in May and June, potentially pushing the terminal Selic rate to 15.25%, will tighten credit conditions, restrict productive investments, and shrink domestic industry. This expectation of a prolonged tightening cycle, coupled with rising inflation expectations (projected at 5.7% for 2025 and 4.5% for 2026) and global trade uncertainties—particularly over U.S. policy—has eroded risk appetite, leading to capital outflows and placing downward pressure on the Brazilian currency.

Brazilian Real Eases After BCB

The dollar index rose to 104 on Thursday, gaining traction after falling to a five-month low of 103.2 this week despite the plunge in Treasury yields, amid dovish developments for currencies in the DXY. The SNB cut its key rate and signaled caution on not letting the franc strengthen due to safety demand, while the BoE and the Riksbank held rates and noted growth risks. This was after the Federal Reserve held its rates unchanged, as expected. Still, the FOMC downwardly revised projections on growth and upwardly revised projections on unemployment, while Chairman Powell noted that the impact of tariffs on inflation is expected to be transitory. In the meantime, the supply of dollars are also set to increase as the Federal Reserve slowed its balance sheet runoff by $20 billion monthly, and signaled that the slower runoff is expected to remain even if the Treasury normalizes its account after debt ceiling concerns are resolved.

US Dollar Index Rebounds

The British pound traded just below $1.30, retreating from a recent four-month high, after the Bank of England held its benchmark interest rate at 4.5% as expected and expressed concerns about both global and domestic economic uncertainties. Despite notable progress on disinflation in recent months, international trade policy uncertainty has escalated following the US announcement of tariffs, which prompted responses from some governments. Additionally, economic data continued to show signs of growth weakness, as Prime Minister Keir Starmer faces challenges in restoring confidence among consumers and businesses. Meanwhile, investors processed fresh unemployment data, with the jobless rate holding steady at 4.4%, and wage growth slowing slightly to 5.8% including bonuses and 5.9% excluding bonuses, both in line with forecasts. In the U.S., the Federal Reserve left interest rates unchanged but indicated two cuts later this year.

Sterling Slightly Below $1.3 After BoE Decision

The Indian rupee strengthened past 86.4 per USD, extending its rebound from the record low of 88 on March 7th amid the pullback in the dollar and the decline in oil prices. Crude oil prices remained relatively close to its lowest in over three years, limiting the outlook of rupee outflows as India imports over 90% of the fuel it uses to power its economy. Still, the RBI is expected to continue its loosening cycle to aid growth. The Indian GDP grew by 6.5% in the current financial year from 8.2% in the prior period. The slowing growth was in line with the extended period of high interest rates and tight currency controls to prop up the rupee, drying liquidity in the Indian financial system and driving the central bank to lower rates and relax its floating peg on the currency. The RBI delivered its first rate cut in nearly five years in its last meeting, in line with market expectations.

Indian Rupee Extends Rebound from Record Low

The euro fell below $1.085, retreating from a near five-month high of $1.09547 touched on March 18th, after ECB President Lagarde warned of weaker growth but downplayed inflation risks if the EU retaliated against US tariffs. Speaking to European lawmakers on Thursday, she cautioned that a 25% US tariff on European imports could cut euro area growth by 0.3 percentage points in the first year, with a counter-tariff deepening the hit to 0.5 points. The sharpest impact would come in the first year, with lingering effects on output, though inflationary pressures would fade over time, signaling the ECB would not respond with higher rates. Traders have recently scaled back expectations for ECB cuts, now pricing in two reductions, likely in April and June. The US Federal Reserve, for its part, held rates steady and reaffirmed plans for two cuts this year.

Euro Slips as Lagarde Warns of Growth Risks from US Tariffs

The Swiss franc weakened past 0.88 per USD after reaching a four-month high of 0.876 on March 18th after the Swiss National Bank lowered its key policy rate to 0.25%, its lowest since September of 2022. Even though the move was largely expected and the central bank refrained from committing to a specific policy path, policymakers noted that lower borrowing costs are appropriate to ensure that monetary conditions match the low inflationary pressure. The move also prevents the franc from being overly strong as geopolitical risks, the stable inflation in Switzerland, and uncertain economic policy in the US raise demand for the currency should investors pivot to safety. The annual inflation rate in Switzerland fell to 0.3% per the latest data, it's lowest in nearly four years. In the meantime, Saron futures showed that the market does not currently price more cuts in the cycle.

Swiss France Pulls Back from 4-Month High

The British pound fell to $1.296 on Thursday, retreating from a four-month high above $1.30, as traders adjusted their positions ahead of the Bank of England's interest rate decision and following the release of jobs data. Expectations for rate cuts this year increased slightly, with traders now pricing in 53 basis points. The unemployment rate remained steady at 4.4%, while wage growth showed a slight slowdown, with growth including bonuses at 5.8% and 5.9% excluding bonuses—both in line with forecasts. The Bank of England is likely to adopt a more cautious stance, amid concerns about the impact of Donald Trump’s trade policies and domestic inflationary pressures. While inflation in January came in at 3%, above expectations, the Bank is expected to keep the benchmark interest rate at 4.5% and maintain a careful approach to further rate cuts. Meanwhile, the U.S. Federal Reserve left interest rates unchanged but indicated two cuts later this year.

Sterling Falls Ahead BoE Decision

The New Zealand dollar fell to around $0.579 on Thursday, even after data showed the economy has emerged from recession. New Zealand's economy grew by 0.7% quarter-on-quarter in Q4, surpassing analysts' expectations of a 0.4% rise and the Reserve Bank’s forecast of 0.3%, following a revised 1.1% contraction in Q3. Meanwhile, annual GDP fell 1.1%, slightly better than the expected 1.4% decline. Despite the improvement, the RBNZ is unlikely to alter its planned rate cuts, as economic weakness persists and external headwinds, particularly the escalating trade tensions, continue to pose risks. In February, the central bank lowered its official cash rate by 50bps to 3.75% and signaled an additional two 25-basis-point cuts in April and May. Meanwhile, in the U.S., the Federal Reserve held interest rates steady on Wednesday and kept its forecast for two cuts amid high uncertainty about President Donald Trump’s tariffs.

New Zealand Dollar Weakens After GDP Data

The South Korean won held steady around 1,460 per dollar as investors assessed the US Federal Reserve’s decision to keep rates unchanged while signaling two rate cuts this year. Meanwhile, Fed Chair Powell downplayed the inflationary impact of Trump's tariffs, calling it likely short-lived or transitory. Domestically, the won remained under pressure as political uncertainty deepened, following the Constitutional Court's decision to withhold a ruling date on President Yoon Suk Yeol's impeachment. On the monetary policy front, the Bank of Korea’s latest meeting minutes signaled concerns over a potential economic slowdown, citing weak domestic spending and uncertainty over US trade policies. However, a board member suggested the easing cycle may end sooner than expected to ensure financial stability, citing rising household debt and property prices.

South Korean Won Holds Steady

The offshore yuan edged lower to around 7.23 per dollar as investors digested the latest monetary policy decision from the People’s Bank of China. The PBOC kept its key lending rates unchanged for the fifth consecutive month in March 2025, aligning with market expectations. The one-year loan prime rate, a benchmark for most corporate and household loans, stood at 3.1%, while the five-year loan prime rate, which guides property mortgages, remained unchanged at 3.6%. Both rates remain at historic lows following cuts in October and July of 2024. Still, the PBOC remarked that it will lower interest rates and adjust the bank’s reserve requirement ratio at the appropriate time. Meanwhile, Chinese policymakers recently unveiled a "special action plan" to boost consumer spending, though it lacked details on implementation.

Offshore Yuan Edges Lower, PBOC Holds Rates

The Japanese yen appreciated past 148.5 per dollar on Thursday, rising for the second straight session as the dollar weakened after the US Federal Reserve reaffirmed its outlook for two interest rate cuts this year. Fed Chair Jerome Powell also downplayed the inflationary impact of President Donald Trump’s tariffs, calling them as likely short-lived or transitory. Meanwhile, the Bank of Japan held its policy rate steady at 0.5% on Wednesday, as expected. Policymakers signaled a cautious stance, opting to assess the impact of global economic risks, particularly higher US tariffs, on Japan’s economy. The BOJ also emphasized its close monitoring of foreign exchange markets and their influence on economic conditions and prices.

Japanese Yen Strengthens on Dovish Fed Signals

The Australian dollar fell below $0.635 on Thursday, marking its third straight decline, as traders reassessed the Reserve Bank of Australia’s monetary policy outlook following weaker-than-expected jobs data. Australia’s unemployment rate held steady at 4.1% in February, but employment unexpectedly declined, raising concerns about labor market softness. Earlier this week, RBA Assistant Governor Sarah Hunter reiterated that February’s rate cut was meant to ease restrictive policy, but emphasized that the board remains more cautious than markets about further rate cuts. Market expectations for the next RBA rate cut remain divided, with some analysts forecasting a move as early as May, while others anticipate it in July or August.

Australian Dollar Slips on Weak Jobs Data

The dollar index hovered around 103.4 on Thursday, near a five-month low, after the Federal Reserve held rates steady but reaffirmed its outlook for two interest rate cuts this year. Officials said they still see another half percentage point of rate reductions through 2025 despite uncertainties around President Donald Trump’s policies on trade, taxes and deregulation. The central bank also lowered its US growth forecast while raising its inflation outlook. However, Fed Chair Jerome Powell downplayed concerns over tariffs, calling their impact on inflation as likely short-lived or transitory. Markets are now aligning with the Fed’s projections, pricing in two rate cuts this year, with the first expected in June or July. Investors are also awaiting weekly jobless claims data on Thursday for further labor market insights.

Dollar Struggles as Fed Signals Rate Cuts

The dollar index pared some gains but remained in the green on Wednesday to trade around 103.7 as traders react to the FOMC decision. The Fed kept the fed funds rate steady as expected and continued to signal two reductions in borrowing costs this year while also revising GDP growth projections lower and inflation higher.

Dollar Pares Some Gains

USDKRW increased to a 6-week high of 1464.00. Over the past 4 weeks, US Dollar South Korean Won gained 2.17%, and in the last 12 months, it increased 10.12%.

South Korean Won Hits 6-week Low

The DXY rose over 103.5 on Wednesday, halting the plunge that bottomed at the five-month low of 103.25 yesterday as the euro took a breather, while markets awaited new economic projections by FOMC members. The Federal Reserve is widely expected to hold its rates unchanged in its decision later today, and fresh dot plots in the Summary of Economic projections will indicate how policymakers currently weigh the pro-inflationary risks of tariffs against the threat they may bring to growth. Rate futures show that the market is currently positioned for two rate cuts by the central bank this year, in line with the FOMC's projections from last quarter. Data showed that the series of tariff threats by President Trump drove households and businesses to reconsider spending patterns and the economic outlook, with inflation expectations and import prices already rising sharply. In turn, growth concerns stemmed by trade barriers and lower public spending limited bets of a hawkish response.

US Dollar Index Edges Higher

USDINR decreased to a 5-week low of 86.45. Over the past 4 weeks, US Dollar Indian Rupee lost 0.01%, and in the last 12 months, it increased 3.95%.

Indian Rupee Hits 5-week High

The Turkish lira plunged as much as 12% to 41 per USD before paring some losses and settling above 39 per USD, still marking a fresh record low, amid rising political turmoil in Turkey. Istanbul’s mayor, Ekrem Imamoglu, one of Turkey’s most popular politicians and President Erdogan’s main rival, was detained on allegations of fraud and terror, after authorities revoked his university diploma, a move that could bar him from running against Erdogan. The Turkish lira has been trading at record lows as the central bank continues its foreign exchange market interventions while maintaining a cautious policy stance. Policymakers implemented another 25bps rate cut in March, bringing the benchmark policy rate down to 42.5%, in line with expectations. Although the central bank governor stressed that policymakers are not on "autopilot" to cut borrowing costs, analysts anticipate the rate will decline to around 30% by year-end.

Turkish Lira Sinks on Political Turmoil

The Japanese yen slipped to around 149.5 per dollar on Wednesday, marking its fourth consecutive day of decline after the Bank of Japan kept interest rates unchanged at 0.5%, as widely expected. The central bank maintained its view that Japan’s economy will likely continue growing above potential but acknowledged some signs of weakness. Policymakers also signaled a cautious stance, preferring to assess how mounting global economic risks—particularly higher US tariffs—could impact the domestic economy. Traders now await BOJ Governor Kazuo Ueda’s post-meeting remarks for further insights. Meanwhile, the monthly Reuters Tankan survey showed Japanese manufacturers turned pessimistic in March due to concerns over US tariffs and a slowing Chinese economy. Separate data revealed Japan’s trade balance swung to a surplus in February, driven by strong exports.

Japanese Yen Weakens as BOJ Holds Rates Steady

The Australian dollar stabilized around $0.636 on Wednesday after a volatile start to the week, as investors continued to assess the Reserve Bank of Australia's monetary policy outlook. On Tuesday, RBA Assistant Governor Sarah Hunter stated that February’s interest rate cut was intended to ease restrictive policy but emphasized that the board remains more cautious than markets about further rate cuts. She also noted that the central bank is closely monitoring US policy shifts to gauge their impact on the global economy, domestic activity, and inflation. Traders now turn their attention to upcoming Australian employment data, which could provide further insights into the labor market’s strength.

Aussie Dollar Stabilizes as RBA Outlook Mulled

The South Korean won weakened to around 1,450 per dollar, extending losses from the  previous session, after the Bank of Korea’s meeting minutes on Tuesday, signaled  concerns over a faster-than-expected economic slowdown. Policymakers cited weak domestic spending and uncertainty over US trade policies, prompting the central bank to cut interest rates by 25 basis points to 2.75% and revised its GDP growth forecast downward to 1.5% in February 2025, highlighting growing economic risks. Additionally, Taiwan's decision to extend anti-dumping duties on South Korean stainless steel imports for another five years at a rate of 37.65% further weighed on the currency, as it could negatively affect steel exports. Investors also closely monitored the US Fed's two-day meeting starting Tuesday, along with Chair Powell's comments on monetary policy and economic outlook.

South Korean Won Extends Losses

The dollar index hovered around 103.3 on Wednesday as investors awaited the Federal Reserve’s latest policy decision, with the central bank widely expected to keep interest rates unchanged. Market focus will be on the Fed’s quarterly updates on rate projections and its outlook for growth, inflation, and unemployment. Meanwhile, the dollar remained near five-month lows as President Donald Trump’s aggressive tariff policies fueled economic uncertainty. Treasury Secretary Scott Bessent told Fox News that while the US economy remains fundamentally strong, he could not rule out the possibility of a recession. The greenback also faced pressure from a strengthening euro after Germany’s parliament agreed on a major debt reform to boost spending on defense and infrastructure.

Dollar Steady Ahead of Fed Decision

The Indian rupee strengthened past 86.6 per USD, trimming this year's selloff that bottomed at a record low of 88 on March 7th amid the pullback in the dollar and the decline in oil prices. Crude oil prices remained relatively close to its lowest in over three years, limiting the outlook of rupee outflows as India imports over 90% of the fuel it uses to power its economy. Still, the RBI is expected to continue its loosening cycle to aid growth. The Indian GDP grew by 6.5% in the current financial year from 8.2% in the prior period. The slowing growth was in line with the extended period of high interest rates and tight currency controls to prop up the rupee, drying liquidity in the Indian financial system and driving the central bank to lower rates and relax its floating peg on the currency. The RBI delivered its first rate cut in nearly five years in its last meeting, in line with market expectations.

Indian Rupee Rebounds

DXY decreased to a 21-week low of 103.22. Over the past 4 weeks, Dollar Index lost 3.68%, and in the last 12 months, it decreased 0.58%.

Dollar Index Hits 21-week Low

The Russian ruble strengthened past 82 per USD in March, its highest since May 2023, as markets positioned ahead of the possibility of a ceasefire with Ukraine and the eventual removal of some US sanctions. Russian President Putin held a call with US President Trump after Ukraine accepted the temporary ceasefire terms raised by Washington. The call followed earlier signals that the US aims to restore economic ties amid the Trump administration's friendlier rhetoric towards the Kremlin. Consequently, markets piled onto Russian assets on hopes that the country’s reintroduction to foreign investment and trade will support foreign exchange inflows. In the meantime, the CBR held its rate unchanged at the record-high 21% in its February meeting, but stated that it may consider a rate hike next week.

Ruble Rallies to 22-Month High

The dollar index pared earlier losses to trade flat at 103.4 on Tuesday, as traders remained cautious about the US economic outlook ahead of the highly anticipated FOMC decision on Wednesday. The Federal Reserve is expected to keep the fed funds rate unchanged while unveiling updated economic projections, which may already reflect the impact of Trump's policies. Meanwhile, Treasury Secretary Scott Bessent told Fox News that while he believes the US economy remains fundamentally strong, he cannot rule out the possibility of a recession. In currency markets, the dollar weakened against the Australian dollar, gained against the yen, and remained little changed against the euro and the pound.

Dollar Wavers, Fed Awaited

The euro was little-changed at $1.09, hovering near its strongest level since November 5th, after Germany’s outgoing parliament approved a significant increase in government borrowing, including a major overhaul of the country's debt rules. The deal, secured by the election-winning conservative CDU/CSU bloc alongside the SPD and the Greens, exempts defense spending from debt limits and establishes a €500 billion infrastructure investment plan. It now moves to the Bundesrat, Germany’s upper house, which represents the country’s 16 states and is set to vote on Friday. Meanwhile, investors are closely monitoring developments in the ongoing trade war and the situation in Ukraine. On the monetary policy front, traders have scaled back expectations for ECB rate cuts this year, now pricing in only two reductions, likely in April and June. Additionally, interest rates are no longer expected to fall below 2%.

Euro Holds Near 4-Month High as Germany Approves Major Debt Reform

The US dollar index rose to 103.6 on Tuesday, still lingering near a five-month low as investors are cautious about the US economic outlook and the potential impact of President Trump’s policies on growth. The Federal Reserve's two-day FOMC meeting begins today, with markets eagerly awaiting the updated economic projections and policy outlook due tomorrow. Traders expect the Fed to keep rates steady but are pricing in two potential rate cuts this year, with some expecting a third. On the economic front, housing starts and building permits exceeded forecasts, while import and export prices rose, contrary to predictions of a decline. The Fed is anticipated to address how tariffs, which could drive inflation but also slow growth, might influence future monetary policy decisions.

DXY Little Changed Ahead Fed

The Canadian dollar steadied below 1.43 per USD, a three-week high, as rising inflationary pressures and easing trade tensions created a mixed economic backdrop. The consumer price index accelerated to 2.6% year-over-year in February, the fastest pace in eight months, primarily due to the end of a federal sales tax holiday that had previously helped contain food and grocery prices. This unexpected surge, coupled with a 1.1% monthly increase and higher core inflation measures, has intensified concerns over persistent price pressures that might compel the Bank of Canada to reassess its monetary easing strategy. At the same time, senior Canadian officials have reported tangible progress in U.S.-Canada trade negotiations, with both sides reaching preliminary agreements on phased reductions in retaliatory tariffs aimed at stabilizing trade flows and addressing critical issues such as tariff escalation on key goods.

Canadian Dollar Steady at 3-Week Highs

The British pound crossed the $1.30 mark on Tuesday, the highest in over four months, driven by expectations that UK interest rates will stay higher for longer. The Bank of England is set to hold rates at 4.5% this week, with traders pricing in a slower pace of rate cuts compared to the Federal Reserve. Markets expect the BoE to lower rates by just 51 basis points by year-end, while the Fed is seen cutting by 60 basis points. Additionally, the dollar weakened due to concerns over US economic growth and trade uncertainty. Despite last week’s data showing a surprise contraction in the UK economy, hopes remain that planned infrastructure investments will support growth. Meanwhile, the UK reaffirmed its commitment to US trade, with Prime Minister Keir Starmer signaling a cautious approach to potential US tariff moves.

Sterling Tops $1.3

USDRUB decreased to a 20-month low of 82.11. Over the past 4 weeks, US Dollar Russian Ruble lost 6.88%, and in the last 12 months, it decreased 9.53%.

Russian Ruble Hits 20-month High

The offshore yuan weakened around 7.24 per dollar, erasing gains from the previous session, as Beijing's latest stimulus measures lacked fresh details overshadowing recent economic data. Over the weekend, Chinese policymakers unveiled a special action plan to revive consumer spending. However, while they emphasized boosting domestic consumption as a priority, the plan lacked significant new details. On Monday, China's economic data sparked optimism with retail sales accelerating and industrial production surpassing forecasts, but declining factory output and a two-year high urban jobless rate tempered the outlook. Meanwhile, Trump announced that Xi Jinping will visit Washington amid escalating trade tensions, though no official timing has been confirmed, adding to investor uncertainty.

Offshore Yuan Weakens

The New Zealand dollar traded around $0.581 on Tuesday, hovering at its highest level since early December, driven by growing optimism about China’s economic outlook. This followed upbeat retail sales data and fresh Chinese initiatives aimed at encouraging consumer spending, boosting the China-proxy Kiwi. Further lifting the antipodean currency was ongoing US dollar weakness amid economic uncertainties and heightened trade tensions. Domestically, recent survey data on the services sector signaled an uneven recovery from recession, reinforcing the case for further rate cuts in line with the central bank’s signal of additional easing last month. Traders now await this week’s Q4 GDP data, expected to show a modest rebound in the Kiwi economy.

Kiwi Hovers at 3-Month High

The South Korean won weakened to around 1,448 per dollar following a sharp spike in the previous session, as investors weighed the political tensions ahead of the Constitutional Court's ruling on President Yoon Suk Yeol. His impeachment stems from a brief declaration of martial law in December. On Monday, the opposition party called on the Constitutional Court to make a prompt ruling on the impeachment of suspended President Yoon Suk Yeol, criticizing the delays as "irresponsible" and warning that they were fueling growing social instability. The court’s ruling, expected this week, has sparked widespread protests across South Korea, with large crowds of both supporters and opponents of President Yoon flooding the streets. In a separate development, South Korean and Ukrainian officials have engaged in discussions about the potential repatriation of two North Korean soldiers captured during the ongoing Ukraine-Russia conflict.

South Korean Won Weakens Amid Political Woes

The Japanese yen weakened past 149.5 per dollar on Tuesday, reaching its lowest level in nearly two weeks as investors braced for the Bank of Japan’s upcoming monetary policy decision. The central bank is widely expected to hold interest rates steady at 0.5% when its meeting concludes on Wednesday, while also assessing the impact of US policy changes on Japan’s economy. Despite the near-term pause, expectations remain that Japan will hike rates later this year, supported by rising wages and persistent inflation, which provide room for policy normalization. Last week, major Japanese firms agreed to significant wage hikes for the third consecutive year, aiming to help workers cope with inflation and address labor shortages. Higher wages are expected to boost consumer spending and further fuel inflationary pressures.

Japanese Yen Falls to Near 2-Week Low

The Australian dollar traded around $0.638 on Tuesday, hovering near a three-month high following hawkish signals from the Reserve Bank of Australia. RBA Assistant Governor Sarah Hunter stated that February’s rate cut was aimed at easing restrictive policy, but emphasized that the board remains more cautious than markets about further interest rate cuts. She also noted that the central bank is closely watching US policy shifts to assess their impact on the global economy, domestic activity, and inflation. Meanwhile, the Aussie dollar has gained nearly 2% over the past two days, buoyed by a  general weakness in the US dollar and renewed optimism about China, Australia’s largest trading partner.

Aussie Dollar Holds Gains as RBA Signals Caution

The US dollar index hovered around 103.5 on Tuesday, lingering near five-month lows as economic uncertainties and trade tensions weighed on the currency. Markets remain cautious amid concerns over US trade policies, with President Donald Trump’s aggressive tariff stance raising fears of potential economic slowdown. Data released Monday showed US retail sales rose less than expected in February, with a downward revision for the previous month. However, stronger-than-expected control-group sales provided some reassurance, suggesting a limited economic slowdown. Looking ahead, traders are focused on the Federal Reserve’s policy decision on Wednesday, where rates are widely expected to remain unchanged. Still, markets are pricing in around 60 basis points of Fed rate cuts this year. Meanwhile, both the Bank of Japan and the Bank of England are set to announce their monetary policy decisions later this week.

Dollar Holds Near 5-Month Low

The Brazilian real strengthened past 5.7 per USD in March, reaching its highest level since November 2024, as fiscal discipline, high interest rate differentials, and external factors supported demand. The National Treasury’s move to curb bond issuances tightened debt supply, stabilizing yields and reinforcing fiscal prudence. Meanwhile, Brazil’s Selic rate at 11.25%—among the highest globally—continues to attract inflows, particularly with inflation expectations holding steady and a 100bps rate cut anticipated this week. Externally, the U.S. dollar weakened amid dovish Federal Reserve rhetoric, boosting demand for emerging market assets. Additionally, Brazil’s trade outlook remains robust, with iron ore prices surpassing $120 per ton and soybean futures rebounding on strong Chinese demand. Beijing’s stimulus measures, including credit expansion and infrastructure spending, further support demand for Brazilian exports, strengthening the real’s position.

Brazilian Real Hits November 2024 Highs

The Canadian dollar strengthened past 1.43 per USD—a three-week high—fueled by easing trade tensions, a softer U.S. dollar, and an improved outlook for foreign currency inflows. Senior Canadian officials have reported tangible progress in U.S.-Canada trade negotiations, with both sides reaching preliminary agreements on phased reductions in retaliatory tariffs designed to stabilize trade flows and address key issues like tariff escalation on critical goods. This significant step toward reducing border friction, coupled with a weakening U.S. dollar—driven by expectations of multiple Fed rate cuts amid softer inflation and a cooling labor market that narrows the interest rate differential in Canada's favor—has underpinned the Loonie's upward trajectory. Additionally, rising crude oil prices, which recently hit a two-week high amid geopolitical tensions, provide a robust boost to Canada’s commodity-driven economy, further supporting the currency's strength.

Canadian Dollar Hits 3-Week High

The US dollar fell to 103.6 on Monday, hovering close to five-month lows due to growing economic concerns and trade uncertainties in the US. February retail sales increased by just 0.2%, much lower than the expected 0.6%, signaling slower economic activity after a revised 1.2% decline in January. With the Federal Reserve's policy decision approaching on Wednesday, markets expect the Fed to keep interest rates steady amid concerns over President Trump's economic policies. However, there are growing expectations for as many as three rate cuts this year, as a slowing economy pressures the Fed. Additionally, the dollar faced downward pressure from the euro after Germany secured a fiscal deal to boost defense spending and stimulate growth in the eurozone's largest economy.

DXY Falls Toward 5-Month Low

The euro approached $1.09, hovering near November highs, as traders awaited further updates on Germany’s fiscal stimulus. The crucial spending plan vote is set for this week, with the proposed reform, exempting defense spending from debt limits and establishing a €500 billion infrastructure investment plan, expected to pass in both Germany's lower and upper houses. This follows a deal secured by the election-winning conservative CDU/CSU bloc with the SPD and the Greens. Meanwhile, investors are closely monitoring developments in the ongoing trade war and the situation in Ukraine. On the monetary policy front, traders have scaled back expectations for ECB rate cuts this year, now pricing in only two more reductions, likely in April and June. Additionally, interest rates are no longer expected to fall below 2%.

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