From Marc Chandler at Bannockburn Global Forex:
The dollar and oil remain firm. The market has a had muted reaction to President Trump’s announcement late yesterday that it will extend its pledge not to strike Iran’s energy infrastructure for ten days (April 6). At the same time, reports indicate the US is considering sending more troops to the area. The logic of “escalation to de-escalate” continues to play out and this will dampen risk appetites ahead of the weekend. Meanwhile, Beijing is taking a page from the US playbook and opened investigations into US trade practices (supply chains and renewables) apparently in response to recently announced US Section 301 investigations.
This is the first time since late last November, the PBOC lifted the dollar’s reference rate on a weekly basis. Still, the restrain Beijing is showing is notable. Since the war began, the yuan has been among the strongest currencies in the world. Its roughly 0.7% decline is half of the loss seen among best G10 currency and most emerging market currencies. Meanwhile, a large sell-off of Japanese government bonds keeps the yen under pressure and the greenback could push above JPY160 today for the first time since mid-2024....*****
...•China reported February industrial profits on its year-to-date year-over-year style. The 15.2% surge is the most since the pandemic recovery in 2021. Profits had contracted in most of H1 25 but turned positive in the second half. They rose by 0.6% last year, the first annual increase since 2021. Separately, China reported a record $243.8 bln quarterly current account surplus (Q4 25). Lastly, we note that Beijing has launched trade investigations into the US (supply chain practices and reusable products), which seem aimed to give it chits given new the US Section 301 investigations.
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