Three key developments warrant attention. Initially, President Trump’s visit to China has been delayed by a minimum of one month. The White House associated it with the war efforts; however, earlier reports indicated that Chinese officials expressed disappointment regarding the insufficient progress in the preparatory efforts. The US administration indicated that the meeting might be jeopardized if Beijing failed to assist in opening the Strait of Hormuz. Reports indicate that Iranian oil shipments continue to reach China. The Reserve Bank of Australia has increased its policy rate for the second time this year. The decision was narrowly made, and while the Australian dollar experienced a brief decline following the announcement, it subsequently rebounded to near $0.7100. Third, Beijing announced it would implement stricter reductions on fertilizer (nitrogen-potassium) and reaffirmed the current limitations on the export of urea. Brent and WTI oil are maintaining their positions within the ranges established yesterday. The dollar is generally weaker, with the Canadian and New Zealand dollars being the only exceptions in the G10 that have not gained momentum. Equities in the Asia Pacific and Europe are showing strength, though the upward momentum may face obstacles in North America today.

European 10-year benchmark yields are exhibiting a softer trend, while the US yield shows a slight firmness. The euro found stability yesterday but failed to surpass the pre-weekend high (~$1.1530), despite achieving its most significant gain in over a month (~0.90%). It ended a four-day decline. Initially, it was sold today and dropped to nearly $1.1465 by late Asia Pacific activity, but it rebounded to $1.1525 in Europe. It needs to surpass resistance in the $1.1525-50 range to enhance the overall sentiment. Options for 1.6 billion euros at $1.1500 are set to expire today. The dollar experienced a pause before the weekend and once more yesterday, hovering around JPY159.75. We propose that the JPY160 level holds more psychological significance than a strict boundary for Japanese officials. In yesterday’s session, the low was noted in North America at approximately JPY158.85, likely influenced by the decline in US rates. The dollar maintained a strong position close to JPY159.40. It is currently experiencing consolidation within a range of JPY159.00-50 today. The market remains resilient around JPY160, though it may require fundamental support to surpass this obstacle.

Similar to the euro, sterling made gains yesterday following the pre-weekend sell-off that brought it to new lows for the year (~$1.3220), ultimately recovering to $1.3340. It failed to surpass last Friday’s peak (~$1.3370). Nevertheless, it broke a four-session decline and recorded its most significant increase (~0.75%) since late January. It was initially sold at approximately $1.3275 today but has since rebounded to yesterday’s peak. The 1.3340-50 area obstructs progress towards 1.3400-30. The US dollar reached its highest position against the Canadian dollar since January 22 prior to the weekend. However, yesterday, it reduced its gains and reverted to nearly CAD1.3650. The asset has remained relatively inactive today, fluctuating within a tight range of CAD1.3680 to CAD1.3700. It could remain within yesterday’s range (~CAD1.3650-CAD1.3730) today.

The Reserve Bank of Australia has increased the overnight cash rate target for the second time this year. The Australian dollar has emerged as the strongest currency year-to-date, currently appreciating approximately 5.8% against the US dollar as of today. Among the G10 currencies, it was one of three that appreciated by over 1% yesterday, alongside the Swedish krona and New Zealand dollar. Initially sold at $0.7050 following the 5-4 decision, it subsequently recovered to near $0.7100, where it encountered resistance before the weekend. The futures market indicates approximately an 80% probability of an additional hike occurring in H1 26, a notable increase from the roughly 45% probability observed yesterday.