Markets are steadier so far today, with a lot more green on the screen than over the past few days. Gains in Asian and European equities as well as US futures reflect market hopes that tariffs might be delayed or quickly negotiated away rather than concrete developments, Scotiabank's Chief FX Strategist Shaun Osborne notes.

USD softer overall as stocks recover, lifting high beta FX

"Price swings yesterday underscore the market’s sensitivity to tariff news. An erroneous, (actual 'fake' news) X post suggested the Trump administration could consider a 90-day pause in tariffs, triggering a very brief 7% jump stocks. Instead, in the real world, President Trump threatened to level another 50- percentage point tariff on China if it did not remove its retaliatory 34% tariff on US imports, helping dump stocks off the snap high."

"So far, 'crickets' from China on that but the Chinese authorities did wheel out measures to help support local markets and the PBoC allowed the USD/CNY fix to nudge above the 7.20 level, a point which has marked the top of the fixing range recently, in a sign that more CNY weakness may be tolerated to help offset massive tariffs. Messaging from the administration on tariff policy remains confusing. Treasury Sec. Bessent announced talks with Japan on tariffs could start shortly while trade advisor Navarro said Trump would not negotiate on tariffs. Markets may lack enough clarity on tariff policy end goals to form a solid base for now."

"The USD’s broader rebound appears to have stalled, with firmer stocks helping lift high beta FX; the AUD and NZD are leading gains among the major currencies on the session. DXY gains may reverse from the mid-103 area and the index faces solid technical resistance at 103.75/00 on the short-term chart. There are no US data reports today. The just-released NFIB Small Business Optimism index dropped 3.3 points to a weaker-than-forecast 97.4 in March. Respondents anticipate weaker sales and hiring and a softer outlook for the broader economy amid uncertainty over tariffs."