POWER: Irish TSO Announces €1bn Spending for Offshore Grid

• The Japanese Yen registers further lows, and although the latest legs lower aren't too fast, the direction of travel has been one way.
• The USDJPY has now done another 100+ pips range day, EUR, GBP, AUD are also breaking through new intraday highs versus the JPY.
• GBPJPY sees the next upside target at 193.172, the February high.

The USD has lost some of its premium in cross-currency basis markets since President Trump’s election victory.

• This is perhaps best evidenced by 3-month EURUSD X-ccy basis moving into positive territory for the first time since the switch to €STR convention.
• ING focus on tariff issues as an explainer, suggesting that beyond the related “flight to safety, there will be a subsequent negative kickback for Treasuries, as higher inflation erodes the value of fixed rate coupons, whether the Fed cuts or not. And America PLC risks a negative tarnish, one that’s already being seen through the prism of a basis discount on the USD X-ccy vs. EUR, and a widening 10-Year swap spread (Treasuries cheapening to the risk-free rate). These aren’t big moves but are a metaphor for trouble”.
• Note that the potential/likely fiscal sea change in Europe could also shift the global flow picture, which is probably already factoring into cross-currency basis flow.

Fig. 1: USD 3-Month Cross Currency Basis (X-ccy) Vs. EUR, JPY, GBP & AUD

Source: MNI - Market News/Bloomberg

The ECB’s latest forward-looking wage tracker update saw a slight upward revision across the three metrics reported. It’s worth noting that there was also an upward revision noted in the February release. Negotiated wage growth excluding one-off payments now tracks at 3.02% for Q4 2025, a touch above the 2.97% reported in February.

• That still implies a notable decline from the 4.66% estimated wage growth for Q4 2024.
• Including smoothed one-off payments, Q4 2025 negotiated wage growth tracks at 1.55% (vs 1.46% in the February update). This is a sharp moderation from the 5.27% estimated for Q4 2024.
• Overall, the tracker is consistent with President Lagarde’s rhetoric at the March press conference: “Recent wage negotiations point to a continued moderation in labour cost pressures”
• The ECB projects compensation per employee growth to ease to 2.8% Y/Y by Q4 2025, from 4.1% in Q4 2024.
• No material reaction in ERZ5 or Bund futures following the release.