Markets Await Fresh Cues – Currency Thoughts
Markets Await Fresh Cues
March 25, 2025
The weighted DXY dollar index hasn’t extended yesterday’s rise to a 2-week high but hasn’t fallen far back either, with overnight losses of 0.3% against the euro, 0.2% versus the yen and Aussie dollar and 0.1% relative to sterling and the Mexican peso but 0.1% upticks versus the kiwi and Swiss franc. U.S. stock futures have given back a little of yesterday’s strong gains, and the 10-year U.S. Treasury yield is two basis points firmer.
Other sovereign debt yields have climbed even further, such as 10-year German bunds (+5 basis points), Japanese and French (+4 bps), and British, Italian and Spanish bonds (each up 3 basis points).
The price of West Texas Intermediate oil advanced 0.7% overnight. Gold is 0.4% firmer, whereas Bitcoin edged down 0.2%.
It’s been a mixed stock market picture in the Pacific Rim. Hong Kong’s rally was abruptly reversed, dropping 2.4% this Tuesday, but Taiwanese and Indonesian share prices closed up 0.8% and 1.2%. Japan’s Nikkei rose 0.5%, while the South Korean Kospi dropped 0.6%. Key stock markets in the euro area are up 0.6-0.9% so far this session.
Among general news items, Australian Treasurer Chalmers is presenting the Labour Government’s pre-election budget, which as expected shows a deficit. Elections are due by May 17. U.S. President Trump is threatening a 25% secondary tariff on purchases of Venezuelan oil, but it appears that the big tariff move planned for April 2nd will be more customized and less generally than implied earlier. Minutes from the Bank of Japan’s January Board meeting that doubled the short-term interest rate target to a 17-year high of 0.50% reveal that additional hikes in the future will hinge on how economic activity and price and wage inflation will evolve. Given the escalation of global uncertainty in the intervening weeks, minutes from January have a dated aura. Talks are continuing on the parameters of a ceasefire in the Russian-Ukraine war, but Russian negotiators are taking a very limited view of what “ceasefire” should actually entail. Israeli bombardment of Gaza continues. Hungary’s central bank is reviewing monetary policy today.
Germany’s IFO Institute released its March business climate survey. The key index (up 1.4 points to an 8-month high of 86.7) responded positively to Chancellor Merz’ plans for the biggest fiscal stimulus in many years including much more defense spending. Perceived current economic conditions rose 0.7 points back to a 2-month high, and an even larger improvement occurred in forward-looking expectations, which printed at a 9-month high. By sector, trade, manufacturing and services rose to their best levels in 10, 8 and 5 months. Construction remains still very depressed but not as much so as in prior months. All in all, the mood of business seems more hopeful.
Consumer confidence fell to a 7-quarter low in South Africa this quarter and a 2-month low in South Korea in March.
In Taiwan, a 3.8% year-on-year drop in retail sales during February was the worst result in 42 months, but industrial production advanced 17.9% on year, easily beating expectations.
Spanish producer prices rose 1.2% on month and by 6.6% on year, their largest 12-month advance in two years.
Icelandic PPI inflation of 9.5% in February was its highest since September 2022 but roughly in line with expectations.
Swedish producer price inflation had been sub-zero percent without interruption from May 2023 to March 2024 and negative as recently as last October. At 3.4% last month, such was similar to January’s 3.5% reading but below analyst forecasts.
Today’s U.S. data menu includes housing prices, the Richmond Fed manufacturing survey, consumer confidence, and new home sales.
Copyright 2025, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: German IFO business climate
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