The United States of America

USD is weakening against EUR and GBP but strengthening against JPY.

Investors remain focused on the US Fed representatives’ comments. On Friday, the head of the Federal Reserve Bank (FRB) of San Francisco, Mary Daly, said that there is no urgent need to reduce interest rates, and there was a lot to be done to ensure a stable inflation movement towards the target of 2.0% since it decreases more slowly than last year. According to the official, against a strong labor market, it is worth keeping the current monetary policy. Chicago Fed President Austan Goolsbee confirmed that accelerating price growth was a concern but added that the new private consumption expenditure index would clarify the current trends. Meanwhile, March retail sales rose 0.7% compared to forecasts of 0.4%.

Eurozone

EUR is strengthening against JPY and USD but weakening against GBP.

February industrial output expectedly rose 0.8% MoM but fell 6.4% YoY as the sector remains under pressure from poor consumer demand and the European Central Bank’s (ECB) “hawkish” monetary policy. Markets hope that the regulator will soon begin adjusting the cost of borrowing, as its representatives are actively hinting at. Thus, the head of the board of the Bank of Lithuania, Gediminas Simkus, said that this year, the ECB might cut interest rates more than three times, and it should not abandon this plan if the US Fed postpones the transition to a “dovish” rate until next year. Earlier, the Governor of the Bank of France, Francois Villeroy de Galhau, confirmed that department officials are convinced that inflation would consolidate at the target level so the start of monetary policy easing in June looks very likely.

The United Kingdom

GBP is strengthening against EUR, JPY, and USD.

Due to a lack of significant economic releases, currency movements are due to external factors. On Wednesday at 8:00 (GMT 2), inflation data will be published. According to preliminary estimates, the March consumer price index will decrease from 3.4% to 3.1% YoY, and the core indicator will grow from 4.5% to 4.1%, confirming the market’s confidence in the imminent start of interest rate cuts by the Bank of England. It is worth noting that previously, the regulator representatives warned investors against overly optimistic forecasts. Last week, a member of the agency’s board, Megan Green, said that the transition to a “dovish” course will take some time since the price growth pace in the service sector remains high.

Japan

JPY is weakening against EUR, GBP, and USD.

In February, core orders in mechanical engineering adjusted by –1.8% YoY, less than January’s –10.9%, and by 7.7% MoM, exceeding the forecast of 0.8% and reflecting the fastest growth since January 2023. Statistics confirm domestic demand growth forecasts and investment despite the yen's weakness. However, analysts note continued risks for the country’s economy due to increased geopolitical tensions in the Middle East. In the event of a new clash between Iran and Israel, a significant increase in oil prices is expected, as a result of which investment in Japanese business will again be under pressure.

Australia

AUD is strengthening against JPY and USD, weakening against GBP, and has ambiguous dynamics against EUR.

Labor market data will be published on Thursday. The unemployment rate may rise from 3.7% to 3.9% in March, and total employment will increase by 7.2%, significantly lower than 116.5K earlier. If these forecasts are realized, the sector will demonstrate its weakness, which will give the Reserve Bank of Australia (RBA) officials additional arguments in favor of starting to cut interest rates. However, most experts believe the regulator economists will not act until the fall.

Oil

Oil prices are actively falling.

Prices are under pressure from easing tensions in the Middle East region and concerns about disruptions in oil supplies. Over the weekend, Iran attacked Israeli territory. However, the damage to Israeli infrastructure was moderate, so there is likely to be no military response. In addition, according to media reports, US President Joe Biden told Israeli Prime Minister Benjamin Netanyahu that Washington will not support aggression against Iran. Thus, the likelihood of resolving the situation increases sharply, contributing to the oil price decrease.