The US dollar exhibits a modest strengthening against the majority of G10 currencies, yet remains largely within its recent trading ranges. The yen stands out as a significant exception. Beijing has declared the imposition of sanctions on additional Japanese firms associated with military connections and has placed others under surveillance, a move that will likely exert a dampening influence. Concurrently, recent data indicates that a significant number of Chinese tourists are refraining from travelling to Japan. Simultaneously, a Japanese paper reported that Prime Minister Takaichi exhibited a more forceful stance against tighter monetary policy during a recent meeting with BOJ Governor Ueda. The probability of an April hike has decreased from approximately 69% prior to the weekend to just under 60% today, marking the lowest level since mid-January. The market persists in attempting to decipher the ramifications of the Supreme Court’s ruling from the previous week alongside President Trump’s latest strategy. Today’s Fed surveys, the Conference Board’s consumer confidence, and house prices appear to be a distraction from the underlying market drivers. Today, three Fed officials are scheduled to speak; however, it is widely accepted that, absent a substantial shock, the Fed will maintain its current stance at least until midyear. President Trump is set to deliver his State of the Union address later today.

Yesterday, following a peak of $1.1835 during the Tokyo-less Asia Pacific trading session, the euro subsequently declined to session lows approaching $1.1775 in the early hours of New York trading. Amidst a winter storm that has immobilised the city, market activity remained subdued, with the euro experiencing a tranquil trading session, primarily oscillating within a limited range around $1.18. The euro has yet to surpass its five-day moving average since February 11, currently just above $1.1780 today. It has remained just under $1.18, with a recorded low slightly beneath $1.1770, yet above $1.1765, where options amounting to nearly 900 million euros are set to expire today. Following the dollar’s decline to JPY154 at the outset of the Asian Pacific session, it experienced a modest recovery, rising slightly above JPY155 as North American markets commenced trading. It was sold back to approximately JPY154.20 after the European market closed and spent the New York afternoon consolidating within the range of about JPY154.30 to JPY154.60. The dollar experienced a significant boost, reaching nearly JPY156.30 today, marking its highest point since February 6. As China emerged from its prolonged holiday, Beijing declared export restrictions on an additional 20 Japanese companies and placed another 20 on a monitoring list, ostensibly aimed at deterring Japan’s re-militarization. Second, a Japanese paper asserts that Prime Minister Takaichi exhibited greater assertiveness in her recent meeting with BOJ Governor Ueda regarding the potential for further rate hikes. It is anticipated that she will reveal a few dovish appointments to the Bank of Japan in the near future.

Sterling achieved a three-day peak just prior to the opening of European markets, approaching $1.3535. The low of $1.3475 was observed during the early session of North American trading. Following the closure of European markets, it remained confined within a range of approximately $1.3480 to $1.3515. The asset is currently experiencing a period of consolidation within a confined range, specifically between $1.3470 and $1.3505. Tomorrow, a special election will take place in the Gorton and Denton district, and a disappointing performance by Labour will reignite apprehensions regarding Starmer’s leadership as Prime Minister. Options for GBP1.2 billion struck at $1.3500 are set to expire today. The greenback established a support level yesterday close to CAD1.3650 during the European session, following a decline to approximately CAD1.3650 in response to the US tariff news at the outset of the 24-hour period. The US dollar experienced a period of stagnation at CAD1.3700 during the initial phase of North American trading, maintaining a position above CAD1.3670 throughout the session before slightly exceeding CAD1.3700 in the later stages of trading. Follow-through buying propelled it to nearly CAD1.3720 earlier today, marking its highest level since February 6. A breach of CAD1.3725 sets sights on CAD1.3760.

Following an initial ascent in the Australian dollar beyond $0.7100, and in light of a 2% increase in gold for the third time in four sessions, it was subsequently retraced to $0.7050. The Australian dollar ranked as the second weakest currency among the G10 yesterday, depreciating by approximately 0.30%. The Norwegian krone experienced slightly greater losses. The Australian dollar experienced a minor decline, falling just beneath $0.7050 today. The 20-day moving average stands at approximately 0.7040, with the Australian dollar maintaining its position above this threshold for more than a month. Options for A$560 at a price of $0.7025 are set to expire today.