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Early G10 FX trends are skewed to risk off. Yen is outperforming up 0.35%, although away from best levels, CHF is +0.20% higher. The USD BBDXY index is down 0.15% to 1270. Risk appetite is being weighed by negative spillover from further downside in US equity futures, led by tech (Nasdaq futures down -1.2%, Eminis off 0.70%). We are away from session lows for these futures. Regional equities are also off, led by Japan. US Tsy futures are higher (cash Tsy yields 4-5bps lower) 

• Weekend news flow reported fresh US/Russia tensions around a lack of a Ukraine ceasefire, while threats of a strike against Iran also made headlines. Trump has also stated reciprocal tariffs will apply to all countries (which are set to be announced on Wednesday).
• USD/JPY got to a low of 149.07, but sits higher now, last at 149.30. Earlier data showed m/m retail sales and IP stronger than expected, but y/y estimates disappointed.  
• NZD/USD has challenged support around the 0.5700 level (session lows at 0.5694), but there has been a clean break lower. The ANZ business survey showed a gradual recovery is still in play, but that costs/pricing pressures are rising again.
• AUD/USD is outperforming the NZD at this stage, the pair little changed near 0.6285/90. The AUD/NZD cross is holding near 1.1020 in latest dealings.
• EUR/USD has ticked higher, last close to 1.0845 (up 0.15%).
• Coming up we have official China PMIs for March, but FX sentiment is likely to be dictated by broader risk shifts in the near term. 

ANZ business confidence eased slightly in March to 57.5 from 58.4, while the activity outlook rose to 48.6, the highest since December. The series are off their Q4 highs but continue to signal that a gradual economic recovery continued in Q1. The price/cost components are trending higher, which will be monitored, but while inflation expectations ticked up they remain in the range seen since November.

NZ growth outlook

• Inflation expectations rose 0.1pp to 2.6% in March, still less than January, but pricing intentions rose 5 points to 51.3, the highest in almost two years. Costs rose to 74.1 from 71.3, likely pressured by the weaker NZD, and wages to 80.0 from 79.2. Q1 CPI prints on April 17.

ANZ business survey price/cost components

Source: MNI - Market News/Refinitiv

• The labour market remained soft moderating to 15.6 in March from 17.0, but the Q1 average was a point above Q4 signalling that it may have stabilised. Q1 employment data is released on May 7.
• There were improvements in the construction components, which may be signalling that the sector has troughed. Residential rose almost 22 points to 47.2, highest since February 2021, and commercial +3 points to 33.3.
• Exports were slightly softer in March at 17.3 but Q1 moderated over a point to 17.0 likely impacted by increased uncertainty over US tariffs and their impact on global demand. The US is NZ’s second largest merchandise export destination. 

USD/CNH has ticked down slightly in the first part of Monday trade, the pair last near 7.2660, slightly under end Friday levels in the US. Broader G10 FX moves are seeing a risk off tone in the first part of dealings, as US equity futures fall amid tariff/US growth concerns. Spot USD/CNY finished up at 7.2622 on Friday, while the CNY CFETS basket was little changed at 99.00 on Friday (per BBG). 

• USD/CNH remains close to the 50-day EMA support point, last near 7.2660. On the topside, recent highs are just above 7.2820. A break above this level could see earlier March highs above 7.3000 targeted.
• CNH is displaying a typical lower beta with respect to broader USD and risk appetite shifts. Yen is up 0.50% so far, while CHF has gained 0.20%. CNH is outperforming NZD and AUD though.
• Focus will be on Wednesday's April 2 liberation day/reciprocal tariff day announcement. From late last week BBG noted that the China authorities have told the US they will retaliate if the US imposes reciprocal tariffs on China.
• Weekend rhetoric around tariffs remained firm from US President Trump, while earlier WSJ headlines cross the administration was weighing broader, higher tariffs.
• Such risks are likely helping keep USD/CNH more elevated that it otherwise would be relative to the softer US-CH yield differential backdrop.
• Locally today we have the official China PMI prints. The market expects manufacturing at 50.4 (prior 50.2), while non-manufacturing is forecast at 50.6 (prior 50.4).