A look at the day ahead in U.S. and global markets from Mike

Dolan

The U.S. dollar is flexing muscle yet again as the first quarter

grinds to a close, surging anew on Wednesday against Japan's

yen, the Swiss franc and China's yuan - and drawing stern

warnings from Japanese government officials in the process.

The dollar/yen exchange rate hit a 34-year high just a

whisker from 152 overnight -- surpassing previous peaks from

2022 that drew intervention from the Bank of the Japan at the

time. The dollar has now jumped almost 20% against the yen since

the beginning of last year.

Clearly monitoring the yen's slide in real time, Japan's

finance minister Shunichi Suzuki issued his strongest warning to

date in the current episode and said the authorities could take

"decisive steps" - a phrase previously used in Autumn 2022 just

before Japan stepped in to sell dollars on the open market.

What irks Japanese officials most is the fact the yen's fall

has accelerated even after the Bank of Japan has started to

normalise its super-loose monetary policy - prompting

speculation the central bank may have to move faster on that

score regardless of any currency market steps.

And of course Japanese stocks lapped up the weaker currency

as an additional export fillip, with the Nikkei benchmark

jumping almost 1% on Wednesday.

The weakening yen tends to pressure other competing Asia

currencies, not least China's yuan - which also fell

again earlier.

Unlike the Nikkei, Chinese stocks got no solace

from the currency move, however, and recoiled to near one-month

lows.

Even though data showed Chinese industrial profits picked up

at the start of the year, political tensions and property sector

worries have seen foreign investors continue to exit the market

- with almost a $1 billion sold again on Wednesday via the Stock

Connect system, the biggest outflow since mid-January.

China's President Xi Jinping met with American business

leaders at the Great Hall of the People in Beijing as the

government tries to woo foreign investors back to the country

and international firms seek reassurance over new regulations.

But the dollar is pumped up more generally - lifted

by slightly more hawkish Federal Reserve noises on the

trajectory for policy rates through next year and beyond.

Above-forecast U.S. durable goods orders data on Tuesday

bolstered the view of a robust economy, while business spending

on equipment showed tentative signs of recovery and consumer

confidence held steady.

With the Swiss National Bank having jumped the gun on its

major central banking peers last week by cutting interest rates,

the Swiss franc leads the way lower against the dollar in

Europe and hit its weakest point since November 3 last year.

A growing feeling that other European central banks may move

to ease ahead of the Fed has put every central bank meeting

under the microscope.

Sweden's crown touched its weakest levels of the year

against both the dollar and euro on Wednesday after the

Riksbank, Sweden's central bank, held its key rate steady at 4%

but said inflationary pressures had eased enough for it to make

the first of several policy rate cuts in the coming months.

The European Central Bank, meantime, is increasingly

confident that inflation will fall back to its 2% target by

mid-2025 as wage growth moderates, strengthening the case for

lower interest rates, ECB board member Piero Cipollone said.

European stocks were marginally higher on the day,

although oil and gas shares there were the biggest drag

on the index as crude oil prices ebbed on rising U.S. crude

inventories and signs Russia is struggling to get payment for

oil shipments amid sanctions threats on related banking flows.

Back on Wall St, the downbeat start to the week for stocks

continued on Tuesday - but futures were positive again ahead of

Wednesday's bell. Treasury yields were flat.

In politics, much of the focus on Tuesday was on how shares

of Donald Trump's Trump Media & Technology Group surged

as much as 59% in their Nasdaq debut, lifted by the former U.S.

president's supporters and providing him a potential windfall as

he grapples with the costs of several legal cases.

But the latest opinion poll trackers show President Joe

Biden's approval ratings among American voters picking up in

March to their best levels of the year so far.

Key diary items that may provide direction to U.S. markets later

on Wednesday:

* Federal Reserve Board Governor Christopher Waller speaks,

Swiss National Bank Vice Chairman Martin Schlegel speaks

* South Africa Reserve Bank policy decision

* US corporate earnings: Cintas, Carnival, Paychex

* US Treasury sells 7-year notes, 2-year floating rate notes

* Dutch Prime Minister Mark Rutte meets Chinese President Xi

Jinping in Beijing; Brazil President Luiz Inacio Lula da Silva

meets French President Emmanuel Macron in Rio de Janeiro

(By Mike Dolan, editing by Christina Fincher,

[email protected])