[MARKET ANALYSIS] DXY finds its footing following recent losses, Antipodeans lag, EUR digests PMIs which indicate slowing growth

DXY is firmer this morning and currently holds at the upper end of a 99.09-99.39 range. Action which appears to be a slight bounce back from the pressure seen in the prior session after US President Trump announced a five-day postponement to military strikes on Iranian power plants. Since, Iran has reportedly denied the notion that talks took place, whilst Israeli press suggested that Iranian Foreign Araghchi informed US envoy Witkoff that Mojtaba Khamenei agreed to negotiations. (Newsquawk analysis on this can be found on the board at 08:50 GMT).
Markets will await more clarity on the matter in the near term, which may cap the index below recent highs (100.54). Geopols aside, focus later on will be on the weekly ADP jobs stats (last week, the series reported an average of +9k/week over the four-week window) and also Flash PMIs, where attention will reside on the initial impact on the economy following the Iran conflict; particularly, to see if the series points to stagflation, as it did for the EU and UK.
G10s are entirely losing against the USD, with clear underperformance in the Antipodeans, which have been impacted by regional factors. For AUD/USD, the pair currently trades around 0.6955, but is still far from Monday’s trough of 0.6910; pressure which stems from weak flash PMIs. As for the Kiwi, RBNZ Governor Bremen highlighted that they would see higher inflation in the near term, which may have impacts on growth.
Over in Europe, a number of PMI metrics have been released. In brief, Manufacturing appears to be remaining resilient whilst the Services component has deteriorated. However, markets looked to the figures for any early indications of the impact on the economy following the Iran conflict. Within the accompanying German report, analysts highlighted that “the service sector has seen an immediate negative impact”, whilst describing manufacturing resilience as a “surprise” – but potentially on “forward purchases over concerns about potential supply disruption in the coming months”. On the growth front, the EZ release suggested the "eurozone GDP growth slowing to a quarterly rate of just below 0.1% in March with the forward-looking indicators pointing to a heightened risk of a downturn in the coming months”. EUR/USD was ultimately little moved on these metrics, and currently trades within a 1.1575-1.1618 range, and around its 21 DMA at 1.1617.
Also for Europe, the EU and Australia agreed a free-trade deal, concluding almost a decade of negotiations, removing most bilateral tariffs and giving the EU greater access to Australian critical minerals.
JPY is also a touch lower vs USD, with USD/JPY currently trading within a 158.27-158.79 range. Overnight, Japanese inflation was softer than expected, with headline Y/Y printing at 1.3% (exp. 1.5%). ING opines that the soft print will prove temporary and will not alter the BoJ’s rate hike cycle.
Finally, the UK’s PMI metrics also indicated resilience in Manufacturing, whilst Services were weaker than expected. The accompanying release highlighted that “the war in the Middle East has hit the UK economy in March, stalling growth while driving inflation sharply higher”. Cable saw some fleeting pressure on the report itself, but this was ultimately short-lived; currently trading around its 200 DMA at 1.3434.