Forex today: UK terror attack, RBNZ on hold, markets pile into safe-haven Yen

The FX space today was mixed with a lower dollar and yields, concerns over Trump's delays to implementing policies lived on and there was a suspected terror attack at Westminster in the UK today where at least four people, including a policeman, was murdered.

There was uncertainty regarding the US healthcare bill, although the White House Press Secretary Sean Spicer announced that Trump believes health care bill will pass House of Representatives on Thursday, adding, "There are no plans to pull health care bill or delay the planned vote on Thursday."

Nevertheless, interest rates in the US 10yr treasury yields dropped even lower from 2.42% to 2.37% to a fresh a three-week low. 2yr yields also fell from 1.26% to 1.24%. This pressured the greenback while it continued to struggle below the psychological 100 mark and ended in the index 0.2% lower. 

With the UK attack, sterling was surprisingly robust, recovering from the low of the day by 68 pips but sub the 1.25 handle. EUR/GBP slid from the 0.87 handle to 0.8643 while sterling maintains a bid on the back of the recent CPI prints beating expectations as we await tomorrow's key retail sales numbers. The EUR was in a range between 1.0780 and 1.0820 while the yen continued with a strong bid for its safe haven status and outperformed again in the G10's. USD/JPY moved from to a four-month low 111.80 down to 110.72 in a determined trend catching demand at the lows back onto the 111 handle as we move over to early Asia. The Aussie picked up a bid on stronger commodity prices while investors note the slightly more hawkish sounds coming from the RBA of late. AUD/USD managed a recovery score towards the 0.77 handle with a high of 0.7692.  The NZD was bid from 0.7020 up until 0.7072 where profit taking came in ahead of the on hold RBNZ that jawboned the bird stating that further depreciation is needed. Meanwhile, the Fed fund futures yields were slightly lower but are still pricing around a 60% chance of the next hike occurring in June.

The day ahead

The day ahead will involve markets waking up and digesting the Westminster incident that is being treated by police as a terror attack while otherwise, there is no pending data until European and US trade. Analysts at Westpac offered a preview of the key events ahead tonight:

"Eurozone: Mar consumer confidence last came in at -6.2 in Feb, a slight pullback from recent peaks. Stronger activity lifted the index in 2016, although political uncertainty remains.US: Feb new home sales rose 3.7% in Jan mirroring the strength in existing home sales. Supply is responding to demand with the number of new homes available for sale up 10.9%yr. Fedspeak involves Chair Yellen delivering the opening speech at a Fed community development conference which also includes Kashkari speaking later in the day. The conference theme is ‘Strong Foundations: The Economic Futures of Kids and Communities’."

Key-notes from US session:

• RBNZ leaves OCR unchanged at 1.75%
• NZD/USD: mixed price action around on hold RBNZ jawboning the bird
• Statement by RBNZ's Wheeler following the OCR decision
• USD/JPY: yen making fresh highs for 2017 - Scotiabank
• AUD/USD: focus on commodities and weaker dollar supporting the bid
• White House: There are no plans to pull healthcare bill - RTRS
• Westminister attack: Police confirms four dead