The euro has rebounded, supported by a softer dollar and tentative signs of geopolitical de-escalation. The latest data highlighted a mixed macro backdrop, with Eurozone inflation picking up to 2.5% YoY driven by energy costs, while core inflation eased and growth indicators—such as German retail sales and French consumption—remained weak, reinforcing a stagflationary tone. European Central Bank officials have acknowledged this balance, signaling caution as policymakers weigh persistent inflation risks against softening demand. For now, the euro’s outlook remains finely balanced, with upside limited by weak activity even as inflation keeps the ECB from turning decisively dovish, while upcoming labor market and PMI data will be key in shaping expectations.

Japan’s latest data points to resilient but cautious economic conditions, with the Bank of Japan Q1 Tankan survey showing improved business sentiment across both manufacturing and services, even as firms grow more cautious on the outlook and scale back capital expenditure plans. Meanwhile, the final March manufacturing PMI was revised slightly higher and remained in expansion territory, though momentum has softened from February, with easing output and demand. Rising input costs—driven by energy prices, a weaker yen, and labor shortages—are also becoming more pronounced, with companies increasingly passing these pressures on to consumers.

Australia’s latest data highlights a sharp divergence in the economy, with a strong rebound in housing—driven by a surge in apartment approvals—contrasting with a steep downturn in manufacturing. While dwelling approvals jumped to near five-year highs and housing activity shows resilience, the manufacturing sector has slipped back into contraction, with sentiment, employment, and capacity utilization all deteriorating sharply amid rising energy costs and supply chain disruptions. In short, a housing-led recovery is being overshadowed by a renewed industrial slowdown, as geopolitical energy shocks weigh heavily on the sector.