Dollar falls on speculation of Fed's dovish hold

Market Review - 19/03/2019  23:57GMT  

Dollar falls on speculation of Fed's dovish hold

The greenback extended its recent losing streak and ended lower against majority of its peers on Tuesday on speculation that the Federal Reserve will keep its interest rate unchanged tomorrow whilst maintaining a dovish stance on monetary policy due to concerns over strength of the U.S. economy after recent release of soft U.S. data.  
  
Versus the Japanese yen, dollar went through a roller-coaster ride. Price fell initially to session low of 111.16 in Asian morning on weakness in Nikkei-225 index and then rebounded to 111.31 in Europe. Despite retreating to 111.21 on selling in usd, renewed broad-based yen-selling pushed the pair to 111.48 in New York due to intra-day rebound in U.S. Treasury yields before retreating again to 111.25.  
  
The single currency traded with a firm bias in Asia and rose steadily to a 2-week high at 1.1362 in Europe before retreating in tandem with sterling to 1.1340 in New York morning on profit taking. The pair then rebounded to 1.1360 before trading sideways in subdued New York session.  
  
The British pound went through another volatile session. Cable found renewed buying at 1.3243 in Australia and rose to 1.3280 in Asia before retreating to 1.3257 at European open. However, price later rallied to session highs at 1.3311 due partly to upbeat U.K. jobs data before falling to an intra-day low of 1.3241 in New York morning as mixed news over whether EU may grant a Brexit extension triggered concerns. Later, the pair rebounded to 1.3287 on dollar's weakness.  
  
The U.K. unemployment rate unexpectedly fell to 3.9% in the three months to January, its lowest level since January 1975, while the number of people in work rose 222,000, its largest increase since 2015.  
  
Average earnings, excluding bonuses, continued to rise at their fastest pace since the financial crisis over 10 years ago, jumping 3.4% in the three months to January. That was above forecasts for a 3.2% rise.  
  
Reuters reported Britain must come up with a reason for any Brexit delay and a no-deal divorce may well happen, French EU Affairs Minister Nathalie Loiseau said on Tuesday.   
  
Reuters reported European Council President Donald Tusk said he told Irish Prime Minister Leo Varadkar in Dublin on Tuesday that the European Union was united on Brexit and preparing if need be for Britain leaving the EU without a deal.   
  
In other news, Reuters reported an extension of Brexit talks beyond the March 29th deadline would only make sense if it increased the chances of the already agreed deal being ratified by Britain, the European Union's chief Brexit negotiator Michel Barnier said on Tuesday.   
  
Barnier said that after two years of talks with Britain on its withdrawal from the bloc, the key moment has now come for London to make up its mind and end the genuine uncertainty that its lack of decision on the way forward has created.   
  
On the data front, Reuters reported U.S. factory goods orders edged up 0.1 percent, the Commerce Department said on Tuesday, held back by decreases in orders for computers and electronic products, after rising by the same margin in December.  
  
There were also declines in demand for primary metals and fabricated metal products.  
  
Economists polled by Reuters had forecast factory orders rising 0.3 percent in January.  
  
Data to be released on Wednesday :  
  
New Zealand current account, Australia Westpac leading index, Japan coincident index, leading economic index, Germany producer prices, UK CPI, RPI, PPI input prices, PPI output prices, DCLG house price index, CBI trens survey, and U.S. MBA mortgage application, Fed interest rate decision.