Dollar Mostly Weaker Ahead of Big Risk Events

 

USD

Global currency markets are attempting to stabilize following the fallout of the first round of the French presidential election. The greenback lost drastically late Sunday evening before recovering modestly during yesterday’s session. However, the greenback is again on its back foot this morning.

Later this morning New Home sales and consumer confidence will cross the wires. But currency markets are likely to take cues from political headlines. The White House is expected to release its plans to revamp the U.S. tax code which is likely to include a 15% corporate tax rate. It is unclear if the President will soften his stance on including funding for a border wall in this week’s spending bill. A deal must be reached to prevent a shutdown of the federal government this weekend.

The White House also announced an import tariff on softwood imports from Canada, putting downward pressure on the “loonie.” The protectionist policy has had mixed reviews, but any hindrance of trade between the U.S. with Mexico or Canada will weigh on growth in all three countries.

 

EUR 

After briefly taking a step back yesterday, the Euro is on the offensive again this morning as investors increase bets that far-right candidate Marie Le Pen will lose big league in the final round of the French presidential election. In addition, France reported slightly better manufacturing confidence data for April and Germany upwardly revised its GDP forecast.

Despite the recent bump higher, the Euro is still finding strong resistance above its 5-month high against the U.S. dollar.

 

JPY 

The Japanese yen remains weak as traders continue to dump safe-haven assets in favor of riskier assets. The MSCI Asia Pacific Index rose nearly a percent and the Japanese Topix gained 1.1%. U.S. futures show American shares will look to add onto yesterday’s stellar gains as traders await the details of Trump’s tax plan.

The Bank of Japan will meet regarding monetary policy on Thursday, but the central bank is widely expected to keep current accommodative measures unchanged.