Dollar Mixed, Equities Down, Bond Yields Higher, and Mood Remains Fearful – Currency Thoughts
Dollar Mixed, Equities Down, Bond Yields Higher, and Mood Remains Fearful
March 20, 2026
In overnight trading, the dollar rose 0.6% against the Japanese yen and 0.8% versus the South Korean won but slipped 0.3% relative to the Canadian dollar and 0.1% against the Swissy, euro and sterling.
A five-basis point advance in the ten-year U.S. Treasury yield exceeds rises of three basis points in comparable sovereign debt yields in Japan and Spain and of two bps in Switzerland and Germany. The 10-year JGB yield is unchanged.
Ninety minutes prior to the opening bell in futures trading, all four major U.S. stock market indices are in the red, with declines ranging from 0.2% in the DOW to 0.5% for the Nasdaq. Earlier this Friday, Japan’s Nikkei clocked a 3.4% plunge, followed share price slides of 1.2% in China, 0.9% in Hong Kong, 0.8% in Australia and 0.4% in Taiwan. Aside from a a 0.8% gain so far in Spain, stock markets are pretty flat in most major European centers.
With Colonel Nickerson-like stubbornness, the warring Middle Eastern combatants haven’t flinched in spite of mounting humanitarian costs in the region, a continuing effective shutdown of traffic through the Strait of Hormuz, mounting U.S. political disapproval of the venture according to political polls, and adverse economic repercussions being felt by most countries around the world. President Trump seeming wants control of Kharg Island, Iran’s energy export hub. Although slipping a percent overnight, the cost of West Texas Intermediate oil remains in the mid-$90’s per barrel or roughly 45% above its level when the conflict started three weeks ago.
Gold and silver prices are around 1.5% above closing levels yesterday.
Investors continue to absorb the mix of high uncertainty and hawkish preparation that emerged from this week’s many central bank interest rate decisions. There were two more today. A decision at the People’s Bank of China to once again leave 1- and 5-year Loan Prime Rates unchanged at 3.0% and 3.5%, respectively. In spite of persistent growth concerns, these benchmarks for all sorts of bank loans have been changed since a 10-basis point downtick ten months ago, and their previous move was way back in October 2024.
The other central bank rate decision today involved an as-expected 50-basis point cut in the Central Bank of Russia‘s benchmark to 15.0%, its lowest level since December 2023. From a peak of 21% reached in October 2024 and maintained until June 2025, seven reductions totaling six percentage points have now been made. Russian consumer price inflation has subsided from 10.3% in March 2025 to 5.9% last month, which is a bit less than the drop in the central bank interest rate.
One highlight of today’s fairly light menu of economic data releases was Euroland’s January current account surplus, which at EUR 13.0 billion in unadjusted terms was a bit more than four times its size a year earlier. The seasonally adjusted surplus of 37.9 billion euros was almost triple the size of December’s surplus. As a percent of GDP, the accrued surplus over the past dozen reported months equaled 2.2% of Euroland GDP.
Several countries reported producer price inflation for February, including Canada’s 5.4% year-on-year reading, which subsided less sharply than analysts were anticipating. Elsewhere, German PPI inflation was -3.3%, its most deflationary reading in 22 months and representing the 28th negative score among the past 32 months. Energy posted a larger 12.5% on-year drop, while non-energy items collectively went up by less (just 1.0% on year) than such had in January. Estonian PPI inflation of 0.8% represents a 2-month low. and so did PPI inflation of 1.5% in Slovenia after a 29-month high of 1.9% in January. Latvian PPI swung to a negative 0.8% reading in February from 2.1% in January and a 21-month high of 3.7% in February 2025. Georgian PPI inflation dropped to 5.7% from 6.5% the month before but, like the other reported PPI data today, is already outdated because of the enormous jump in energy costs this month.
In Hong Kong, consumer price inflation accelerated to a 9-month high of 1.7% in February from 1.1% in January.
The orders sub-index in the CBI monthly survey of British industrial trends was less negative this month (-27) than it has been over the past six months.
Copyright 2026, Larry Greenberg. All rights reserved.
Tags: Central Bank of Russia, Euroland current account
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