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Early G10 FX trends are skewed modestly in favor of the USD, unwinding some of Monday's shifts, albeit only marginally at this stage. The USD BBDXY was last up a little over 0.15%, to be close to 1218.25. A firmer US equity futures backdrop since the open is aiding USD sentiment, particularly against the safe havens. 

• The USD BBDXY index is still close to intra-session lows from Monday near 1212, which was fresh lows in the index back to end 2023.
• Eminis and Nasdaq futures are up around 0.30-35% at this stage, but this follows cash losses from Monday trade of more than 2%. Concern around Fed independence weighed notably.
• USD/JPY has risen back above 141.10 in latest dealings, with Monday lows just under 140.50. EUR/USD is down to 1.1490, while USD/CHF is back above 0.8110, these currencies off around 0.20-0.30% versus the USD.
• US yields are mostly lower, with the 10yr back sub 4.40%, after Monday's sharp rise led by the back end of the curve.
• Japan FinMin Kato stated that he is heading to the US today for global meetings, and aims to meet with US Tsy Secretary Bessent and discuss FX.
• Elsewhere Economic Revitalization Minister Akazawa stated that Japan and the US are deciding the scope of trade talks (per BBG). This will remain a key focus point for markets.  
• NZD/USD is down around 0.30% as well, last near 0.5980/85, while AUD/USD is back close to 0.6400.
• We had NZ trade data earlier, with another trade surplus recorded, but NZD sentiment wasn't impacted.
• The data calendar is empty for the remainder of today's Asia Pac session.  

NZ recorded its third merchandise trade surplus in four months in March at $970mn up from $392mn. The YTD deficit narrowed to $6.13bn from $6.63bn. It has now declined around $11bn since the May 2023 peak. Both export and import growth were robust last month. Trade is a bright spot in NZ’s struggling economy but with a 10% tariff on goods to the US and an escalating US-China trade war the outlook is highly uncertain and likely to be negative.

NZ merchandise trade balance $bn YTD

Source: MNI - Market News/LSEG

• Goods exports rose 0.6% m/m sa and 18.9% y/y with shipments strong to the two largest destinations China (+22.7% y/y) and the US (+21.8% y/y) while they were weak to Australia after a run of solid months (-0.5% y/y).
• Exports to the US have been trending higher since before Covid but they reached a new record level in March, as producers likely wanted to beat the imposition of US tariffs.
• Shipments of milk products, meat and machinery & equipment have driven the strength over the year. There was strong growth in milk products & fruit to China, while to the US it was meat.
• Imports fell 1.9% m/m sa in March but annual growth has been robust rising to 12.4%. The annual strength has been concentrated in consumer goods (+14.7% y/y) and non-transport capex (+8.3% y/y), while transport has been weak down 3% y/y, but does tend to be volatile.
• Q1 merchandise export values rose 11% q/q, while imports were up 4.1% q/q. 

NZ goods exports y/y% 3-mth ma

TYM5 is trading 110.24+, down 0-01 from its close. 

• Risk turned lower on Monday with concerns that President Trump will fire Fed Chairman Jerome Powell, adding to a market that is already consumed with uncertainty.
• “The US treasury has $60 Billion of extraordinary measures left, in addition to its cash pile, to help keep paying the government's bills.”(per BBG)
• Global GDP may take a $2 Trillion hit by the end of 2027 from Trump’s tariffs, per Bloomberg Economics estimates.
• Russia - Ukraine: Trump said there’s a good chance of a deal being reached this week. A US delegation led by Marco Rubio, Steve Witkoff and Keith Kellogg are slated to meet Ukrainian and European officials in London on Wednesday.
• China has warned countries against striking deals with the US that could hurt Beijing’s interests, putting countries in a position where they will eventually have to pick a side.
• The US 10-year yield has opened in Asia around 4.40%, after closing at 4.4106%.
• Data: The IMF releases its World Economic Outlook