1118 GMT - The energy crisis is yet to seriously hit eurozone business activity, Jack Allen-Reynolds at Capital Economics says in a note. In a survey by the European Commission, sentiment was little changed in the industrial, services and construction sectors, while retail saw a small fall. This is consistent with GDP rising around 0.4% on quarter, which is better than PMIs for March suggested, Allen-Reynolds says. Consumer confidence tumbled, but it remains too early to suggest elevated energy prices are feeding through to other areas of the economy. "Policymakers might at least be encouraged by the absence of a much bigger move in the services sector," he says, adding that this weakens the case for a eurozone rate hike. (don.forbes@wsj.com)

1051 GMT - Germany continues to show the highest levels of distress among major European markets, despite some improvement since the latter half of 2024, the latest Weil European Distress Index shows. The index measures distress and default risk across corporate sectors. Despite tentative signs of improvement — helped by easing inflation and lower borrowing costs --, conditions in Germany remain challenging, the report says. This is due to issues surrounding liquidity and pressure on profitability and investment, it adds. "With the recent high in oil prices and ongoing instability in the Middle East, further volatility can be expected," the report says. France remains the second most distressed market, while the U.K holds the place of the third most distressed, according to the report. (nina.kienle@wsj.com)

1033 GMT - Joint Japan-U.S. interventions to strengthen the Japanese yen against the dollar after recent falls shouldn't be ruled out, Commerzbank's Thu Lan Nguyen says in a note. In January Treasury Secretary Scott Bessent pushed back against speculation of such interventions but this came as the dollar fell, she says. The conditions for coordinated inventions now appear more favorable as the dollar is appreciating, she says. A meeting of G-7 central bank chiefs and energy and finance ministers Monday could provide a good opportunity for Japan's Finance Minister Satsuki Katayama to bring Bessent on board, she says. The dollar falls 0.4% to 159.64 yen after interventions threats from Japanese officials, having reached a 20-month high of 160.46 overnight, according to LSEG.(renae.dyer@wsj.com)

1020 GMT - The euro could rise at least temporarily if March German inflation data at 1200 GMT are higher than expected, Commerzbank's Thu Lan Nguyen says in a note. This would fuel expectations for a sharper acceleration in inflation due to rising energy prices resulting from the Middle East conflict. Potentially, this could lift already-pronounced expectations for interest-rate rises from the European Central Bank even higher, she says. The market expects the ECB will respond more quickly to the inflation shock than it did in 2022 when Russia's invasion of Ukraine pushed up energy prices. This has limited the euro's falls recently, she says. However, a sharper euro downturn is possible if the Iran war escalates, she says. The euro drops 0.1% to $1.1495.(renae.dyer@wsj.com)

1007 GMT - U.S. Treasury yields continue to fall from elevated levels. Investors are gradually turning their focus towards risks to growth from the Middle East war as well as inflation concerns. Surging energy prices have caused markets to slash expectations for U.S. interest-rate cuts due to inflation concerns. However, the Federal Reserve will have to balance both growth and inflation risks. This week's raft of U.S. economic data, including Friday's monthly payrolls figures, "will be critical in shaping the monetary policy expectations," Kudotrade's Konstantinos Chrysikos says in a note. The two-year Treasury yield falls 2.3 basis points to 3.893%; the 10-year Treasury yield falls 4 basis points to 4.400%, according to Tradeweb. (emese.bartha@wsj.com)

1001 GMT - The cost of insuring euro credit against default climbs as risk aversion dominates markets due to the Middle East conflict. "Market nervousness around the situation in the Middle East continues to ratchet up as the Iran conflict enters a fifth week," says AJ Bell's Danni Hewson says in a note. The iTraxx Europe Crossover index of euro high-yield credit default swaps rises 2 basis points to 365bps, S&P Global Market Intelligence data show. The iTraxx Europe Senior Financials of euro financial investment grade CDS climbs 1bp to 81bps. (miriam.mukuru@wsj.com)

0945 GMT - The Indian rupee is likely to continue depreciating if the Middle East conflict persists, Michael Wan of MUFG writes in a note. India's central bank announced new regulations to limit open positions for authorized dealers in onshore currency markets to $100 million each at the end of the trading day, and the rupee initially strengthened against the dollar early Monday before weakening again, breaching 95 rupees against the greenback. "It's unclear what's driving these moves but we note that many drivers are at play in markets right now including an escalation in the Iran conflict," Wan says. "What needs to change for [the rupee] is a more sustained period of capital inflows. These flows have already been lacking before the Iran conflict," Wan says. (kimberley.kao@wsj.com)

0935 GMT - Economists at Pantheon Macroeconomics reduce their U.K. growth forecast to 0.5% in 2026 from their earlier forecast of 0.9% due to the Middle East war. There are no clear signs of a near-term end to the conflict, which raises uncertainty around its full impact on global growth and inflation, the economists say. However, risks lean towards lower U.K. growth and higher inflation, they say. The economists revise up their forecast for U.K. inflation to 3.3% in 2026, from the earlier forecast of 2.6%. (miriam.mukuru@wsj.com)

0923 GMT - The dollar turns higher again as concerns about an escalation in the Middle East conflict lift oil prices and dent risk sentiment. The dollar edged lower earlier as the Japanese yen strengthened following growing warnings from Japanese officials about potential interventions to prop up the currency. However, the dollar's decline proved modest and brief as it benefits from its safe-haven role and America's position as a net oil exporter. "Barring any clear, conciliatory messages from the Iranian side, it is hard to see the dollar handing back this month's gains anytime soon," ING's Chris Turner says in a note. The DXY dollar index rises 0.1% to 100.287, near a two-week high of 100.342 reached overnight. (renae.dyer@wsj.com)

0854 GMT - Investors see a rising risk of stagflation--or slower growth and higher inflation--due to the Middle East war, making long-dated bonds attractive, Moneyfarm's CIO Richard Flax says in a note. Moneyfarm believes that longer-dated bonds are beginning to look more attractive, despite their volatility, although it doesn't currently own many in its portfolios. "It's a reminder that diversification isn't just about allocating between government bonds and equities," Flax says. (emese.bartha@wsj.com)

0850 GMT - The dollar-yen currency pair is likely to remain highly volatile around the 160 level, says XS.com's Linh Tran in commentary. The market appears to be balancing two opposing forces, with upward momentum supported by interest-rate differentials and the strength of the dollar, while the growing risk of policy action from Japan could weigh. Sudden intervention could lead to sharp corrections over a short period and the area above 160 could act as a temporary cap, she says. Still, she expects the broader upward trend of the dollar-yen currency pair to remain intact in the medium term as underlying fundamentals haven't materially changed. The dollar is 0.4% lower at 159.66 yen, LSEG data show. (megan.cheah@wsj.com)
source: https://www.tradingview.com/news/DJN_DN20260330002976:0/