• USD: Lower, PPI falls the most in seven months, steady Fed policy
    • JPY: Lower, BOJ expands quantitative ease and raised its lending auctions to ¥20trln
    • EUR: Lower, annual rate of labor cost rise the slowest in four years
    • GBP: Higher, UK claimant count posts biggest drop in 13 years, BOE minutes note increased inflation risk
    • CAD and AUD: AUD & CAD higher, strong Australian housing data, easy money from the Fed and BOJ

      Overview

      The USD traded mostly lower Thursday pressured by the Fed’s decision to hold  monetary policy steady and signal that interest rates will remain low for an extended period. GBP surged in reaction to report that UK jobless claims declined the most in 13 years. GBP was also supported by the minutes from the BOE’s March policy meeting which state that the central bank is growing more concerned about inflation risk. EUR traded lower with gains limited by report of slowing rise of labor costs in the EU and selling pressure in cross to the GBP. The commodity currencies traded higher in reaction to firmer equity market trade with the AUD supported by hawkish comments from the RBA's Debelle and strong Australian housing. Debelle said rates may have to rise a bit more. CAD was supported by report of a surge in Canada’s whole sale trade. JPY traded lower in reaction to the BOJ's decision to expand quantitative ease from ¥10trln to ¥20trln. Today's US economic data was mixed with PPI posting a bigger than expected decline. The PPI report supports the Feds forecast that US inflation pressures will likely remain subdued. With the US economic recovery uneven and inflation subdued the Fed will be in no hurry to tighten monetary policy. Focus turns to Thursday’s release of US CPI.

      Today’s US data:

      February PPI declined by 0.6%, reading of -0.2% was expected. PPI posted its biggest decline since July of 2009. Core PPI rose by 0.1% compared to 0.3% in January.

      Upcoming US data:

      On March 18th February CPI will be released expected at 0.1% compared to 0.2% last month. Q4 current account, initial jobless claims for week ending 03/13, leading indicators for February and March Philly Fed will also be released on March 18th. The current account is expected at -120bln compared to -108bln last quarter. Initial claims are expected at 457k compared to 462k last week. Leading indicators are expected to rise by 0.2% compared to 0.3% last month. Philly Fed is expected at 18 compared to 17.6 last month.