The is trading a little softer today, but the tone is one of nervous consolidation. The market is digesting reports that Iran has reached out to negotiate the end of the war. The fog of war continues to cast a heavy pall over the markets, though there is a hope that the war can be short-lived. After a further sell-off in the Asia Pacific region, equities have stabilized and oil prices, while volatile, are little changed as the North American session is about to start.
Japan’s Minister of Finance reiterated the threat of intervention, and this may have helped the dollar hold below JPY158. The inflation implications of the rise in oil prices appear to have overwhelmed the likely consequences for the demand (weaker). This has seen the market push out the next cuts in the US and UK. The situation remains fluid and near-term market conviction is weak.
Prices
G10
• The was sold to $1.1530 in the North American session yesterday, its lowest level since last November, when it bottomed in the $1.1470-90 area. It settled above $1.1600 but still well below Monday’s low (~$1.1670). After it initially fell to $1.1575 in the Asia Pacific session, it recovered to almost $1.1650 today, where it stalled in Europe. The lower Bollinger Band is found slightly below $1.1645 today. The technical damage inflicted is significant, and although the euro is oversold, near-term consolidation may be the most that can be hoped for until the fog of war lifts. Meanwhile, we note that the US two-year premium over Germany reached a two-month low yesterday (~135 bp) and is slightly firmer today.
• The dollar stalled in front of JPY158 yesterday and warnings of intervention by Finance Minister Katayama helped it hold today. The dollar was sold to almost JPY156.85 by early European turnover. It was bought and lifted to almost JPY157.50. BOJ Governor Ueda warned that the war could impact the Japanese economy in contradictory ways, with higher oil prices pushing down the price trend or boosting inflation through elevated price expectations. The uncertainty has seen the swaps market push out the next hike to July.
• Sterling recovered from a low a little above $1.3250 to almost $1.3370 in North America yesterday. It settled inside Monday’s range. It is consolidating today between about $1.3300 and $1.3400. A move above $1.3425-40 would help repair the technical damage.
• The Canadian dollar was the only G10 currency to recover yesterday back into positive territory, though closed marginally lower. The greenback had spiked to nearly CAD1.3755 yesterday, its highest level since January 23 before it fell back below CAD1.3660 in the North American afternoon. It is trading quietly between roughly CAD1.3650 and CAD1.37600.
• The Australian dollar was pushed to about $0.6945 as European markets were closing yesterday, and by late in the North American afternoon recovered to almost $0.7060. It settled within Monday’s range and retracement about half of what it lows since the pre-weekend high (~0.7130). It was initially sold to $0.6985 today and reached nearly $0.7075 in Europe before stalling.
EM
• Yesterday, the reached its best level against the Mexican peso since January 13, near MXN17.8770. Although the dollar pulled back, it still settled above February’s highs (~MXN17.56-57). It recovered to nearly MXN17.7750 today before sellers pushed it back to MXN17.54 before consolidating. Yesterday, was the fourth consecutive dollar advance, which matches the longest streak since March 2025.
• The greenback spiked to almost CNH6.9440 yesterday, stopping below last month’s high (~CNH6.9630) and settled slightly above Monday’s high (~CNH6.9135). The greenback is consolidating today between about CNH6.8940 and CNH6.9350. While China is the world’s largest importer of oil, reports indicate that it has been building its strategic reserves. After setting the dollar’s reference rate sharply lower yesterday (~0.20%, the most since last August), it was set slightly higher today (CNY6.9124 vs. CNY6.9088).
• Indian markets re-opened after yesterday’s holiday and played catch-up. The US dollar gapped sharply higher against the rupee. Its low was above the record highs set in late January (~INR92.0160) and the high was around INR92.3050. The central bank changed the maturity profile of its short dollar forwards which reduced the near-term delivery pressures, which ostensibly created more scope for intervention and reports indicate it used some of that space to intervene today.
Other Markets
• Asia Pacific equities suffered sharp losses again today. Japanese indices were off 3.6%, was down almost 4.4%, while South Korea’s Kospi was slammed for 12% after it dropped 7.25% yesterday. It is still up almost 21% year-to-date. China’s was off a little more than 1%. Europe’s Stoxx 600 is up about 1.2% near midday. It lost almost 3.1% yesterday. US index futures are around 0.2%-0.4% firmer after they lost 0.8%-1.0% yesterday.
• After jumping yesterday, benchmark 10-year yields are mostly lower today. The 10-year JGB yield eased a couple of basis points to 2.10%. European 10-year yields are mostly half to two basis points lower. The 10-year US Treasury yield is the notable exception. It is almost two basis points higher, slightly below 4.08%.
• has steadied. After tumbling nearly 4.4% yesterday it is about 2% higher today, straddling the $5200 area. Similarly, silver, which was tagged for 8.25% yesterday, is about 5.25% higher and back above $86.
• April peaked yesterday slightly shy of $79. It spent most of the North American session trending lower and briefly traded to $71.65. It is consolidating in a wide range of about $74.35 to $77.25 today. It is near $75.60 in late European morning turnover. Monday’s low, and the top of the gap from the sharply higher opening was about $69.20. The International Energy Agency noted that member countries have over a billion barrels in emergency stockpiles but did not indicate the terms of release. Over the past 35 years, the agency has helped coordinated five such effort to stabilize prices (1991 Gulf War, hurricanes Katrina and Rita in 2005, the Libyan uprising in 2011, and two following Russia’s 2022 invasion of Ukraine). OPEC+ agreed to boost output this past Sunday. President Trump said that the US Development Finance Corp will provide political risk insurance and guarantees for all maritime trade traveling through the Persian Gulf. He also suggested that there could be US Navy escorts when possible.
Data
• The ADP private sector jobs estimate is arguably the most important US data point today. The median in Bloomberg’s survey is for a 50k increase after 22k in January. US final services and composite PMI are due but will be overshadowed by the February ISM services report. The Fed’s Beige Book ahead of the upcoming FOMC meeting is released at 2:00 PM ET today. The odds of a June cut, according to the Fed funds futures, have been downgraded to about 55%. It was fully discounted as recently as February 10. The market is still pricing about 55 bp of cuts this year.
• A knock on Canada has been its poor productivity, and today’s Q4 reading will likely underscore this. Labor productivity looks to have slipped by 0.1% after a 0.9% gain in Q3. The February services and composite PMIs are likely to have remained below the 50 boom/bust level. The composite was above 50 once last year (October). It stood 46.8 in February 2025.
• The February eurozone final services and composite PMI were in line with the preliminary estimates. At 51.9, the composite PMI improved for the first time in three months but is below 52.8, the 2025 peak recorded in last November. Last February it was at 50.2. Separately, eurozone producer prices rose by 0.7% in January, but the deflation grip remained and producer prices are off 2.1% year-over-year. Lastly, January unemployment rate fell to a new low of 6.1% from 6.3% in December.
• The final UK February composite PMI stands at 53.7, down from the initial estimate of 53.9. It was unchanged from January. the best level since April 2024.
• Australia’s final February service and composite PMI were in better than the flash estimates but still down from January. The services PMI is at 52.8, up from 52.2 initially but below 56.3 in January. The composite PMI is at 52.4, better than the 52.0 initial estimate but off from the 55.7 posted in January. and were overshadowed by the initial estimate of Q4 25 GDP. The Australian economy expanded by 0.8% in Q4 after 0.5% in Q3 25 (initially 0.4%). The 2.6% year-over-year pace matches the best since Q1 23. It is the fifth consecutive quarter that the year-over-year pace accelerated.
• Japan’s PMI tends not to capture the market’s imagination. Yet, for the record, the final composite reading was 53.9, up slightly from the initial estimate of 53.8. In February 2025, the composite PMI was at 52.0.
• China’s PMI and the RatingDog (formerly Caixin) PMI were reported earlier today. The manufacturing PMI slipped to 49.0 from 49.3 and the non-manufacturing PMI edged up to 49.5 from 49.4. The composite (49.5) remained below 50 for the second consecutive month, for the first time since the end of 2022. The RatingDog iteration, with its focus on smaller businesses, continues to outperform the “official” one conducted by the China Federation of Logistics and Purchasing. The RatingDog composite slipped below 50 once last year (May). The RatingDog composite PMI rose to 55.4 from 51.6.
