Forex today: markets looking for a catalyst but still suffering FOMC hangover
|The forex space today was on the hunt for a fresh catalyst as traders spring back from the FOMC hangover although found themselves in a wide open space void of anything that could shake up the status quo.
The dollar continues on the backfoot, albeit able to rise around 0.1% on the US session despite the US 10yr treasury yields falling to a fresh two-week low from 2.50% to 2.47%. There was little to move on with Japan closed overnight and a lacklustre start in European trade in currencies other than the euro, Swissy and sterling. The yen was a strong performer though and that carried through between a range of 112.46 and 112.90. The underperformer on the bloc was sterling again. GBP/USD fell from 1.2435 to 1.2335 on the announcements that Article 50 will be triggered on the 29th March. As far as the antipodeans go, the Aussie remains the best performer for the month and spiked up to make a fresh four-month high at 0.7748. AUD/NZD was pretty much sidelined considering the Kiwi was also able to climb against the dollar to 0.7075. Fed Evens, with a bias of three hikes, offered the possibility of four rate hikes for 2017 and that supported the dollar. Harker was noting risks of inflation overshooting.
The day ahead:
All eyes will remain in the RBA minutes and markets will be looking for concerns over the housing and jobs market.
For NZ, we have the visitor arrivals and the GDT dairy auction that is priced by futures to show a WMP price fall of 5%. The French election debate has just got underway but is not likely to move markets. Trump is scheduled to make a speech and Aussie housing data will also be key. We will hear more from Fed speakers when Dudley speaks in London on bank ethics, but unlikely to offer Fed forward guidance. The main event for London will be the UK's Fe CPI and how a depreciating pound is impacting UK prices.
Key notes from US session
- USD/MXN drops below 19.00 for the first time in four months
- USD/JPY intermarket: watching US yields struggle below 2.50%
- What’s the rush to raise rates? - FOMC's Kahkari - BBG
- Ultra-low Bank of England interest rates have taken a toll on productivity - BoE's Haldane
- Antipodean Central Bank events coming up - UOB
- AUD/USD: steady awaiting RBA minutes tonight, eyes on 0.80 handle?
- All eyes will on inflation data in the UK - UOB
- Fiscal policy details still unclear - Fed's Evans
- GBP/USD on the backfoot with Brexit concerns, 1.2110 eyed
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