Written by Steven Dooley, Head of Market Insights, and Shier Lee Lim, Lead FX and Macro Strategist
Note: The Daily Market Update will take a break over Easter and return on 2 April
USD/JPY hits highest level since 1990 before reversing
The US dollar, as measured by the USD index, neared six-week highs overnight with the greenback’s gains mainly fueled by further weakness in the major Asian FX markets.
The USD/JPY hit a 34-year low in yesterday’s trading as markets continued to take advantage of the favorable yield differential, selling yen and buying USD, in a risk-appetite driven move that was reflected by further big gains in other markets likes US share with the Dow Jones up 1.2% overnight.
However, the USD/JPY reversed sharply and suddenly in European trade as Japanese authorities again warned that they are willing to intervene in FX markets.
The Chinese yuan was also weaker yesterday, with the USD/CNH up 0.1%, in a continuation of recent weakness as markets speculate that further policy easing and interest rate cuts could pressure the Chinese currency.
The USD/CNH is just 0.4% from four-month highs.
US data could drive greenback further
In terms of upcoming US data, tonight’s jobless claims and tomorrow’s PCE (personal consumption and expenditure) figures are the major events.
Last week’s US jobless claims figures were another positive for labor market conditions.
While continuing claims rose slightly, initial claims declined, with both reports improving after seasonal adjustments.
We’re still to see signs of widespread layoffs, but expect claims data to gradually rise from historically low levels eventually.
For now, stronger US data has kept the USD elevated, with the USD index nearing a move to four-month highs.
GBP eases with UK business confidence mixed
The GBP has been moderately lower over the last month with the GBP/USD down 0.5%, AUD/GBP up 0.4% and GBP/SGD down 0.4%.
The overall business confidence balance in the Lloyds business survey released overnight remained steady in March but at +42 remains well above the +28 series average.
Staffing numbers improved in February to the best level since early 2022. Furthermore, the price expectations balance of +58 is still close to the record high of +61.
However, the Confederation of Business Industry survey (below), typically broader in scope than Lloyds business survey, has recently dipped lower.
USD/JPY down from highs after further intervention talk
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 25 – 29 March
All times AEDT
*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
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