Dollar remains on the back foot in the aftermath of less hawkish Fed rate rise forecasts: March 20, 2017

  Market Review - 18/03/2017  03:16GMT  

Dollar remains on the back foot in the aftermath of less hawkish Fed rate rise forecasts

The greenback continued its losing streak and remained under pressure against its major peers on Friday, weighed down by Fed's less hawkish stance at their rate announcement on Wednesday.  
  
Versus the Japanese yen, dollar traded sideways in Asia, met renewed selling at 113.44 at European open and tumbled to session lows of 112.57 in New York morning on the greenback's broad-based weakness together with active buying of the Japanese currency, price traded narrowly in subdued New York afternoon as traders are on the sideline due to the 2-day G20 meeting which starts on Friday in Germany, the pair closed around 112.69, not far from its Friday's 2-week low.  
  
The single currency also traded sideways in Asia and edged up to a fresh 5-week high at 1.0782 at European open. However, euro quickly retreated on broad-based long liquidation and then dropped sharply to session lows of 1.0728 at New York open after latest French polls showed far-right EU leader Le Pen extending her lead over centrist Macron in the first round of French Presidential elections. The pair moved narrowly in New York afternoon as traders awaited official G20 communique on Saturday.  
  
Opinionway poll reported Far-right's Le Pen to get 28 percent (+1) in 1st round of French election, Macron 25 percent (unchanged), Fillon 20 percent (+1).  
  
The British pound traded in a narrow range in Asia and briefly dropped to session low at 1.2324 at European open on comments from Scotland's Salmond. However, cable pared its losses and rallied to an intra-day high at 1.2399 in European morning before retreating again in tandem with euro to 1.2335 ahead of New York open. However, renewed buying in sterling vs usd and the euro helped price climb to a 2-week peak of 1.2405 in thin New York afternoon session and price closed around 1.2395 at Friday's closing.  
  
A report in Financial Times quoted former Scottish National Party leader Salmond as saying 'If Scotland votes for independence, nationalist government could abandon proposals for a currency union with the UK.'  
  
In other news, Fed's Kashkari said 'Fed shudn't behave as if 2% inflation target is a ceiling; inflation still short of target, labor slack remains; it's not clear that gradual rate hikes now are better than aggressive ones later; he is not incorporating fiscal policy changes into his forecasts; Fed shud resume rate hiks only after it sees mkt reaction to balance sheet plan; publishing balance sheet plan cud trigger tighter financial conditions; he expects little mkt reaction to publication of Fed plan on balance sheet reduction; Fed shud begin process of normalising balance sheet soon; once data support tightening, Fed shud first publish plan on trimming balance sheet; he dissented on rate hike because data don't support timing.'  
  
On the data front, the preliminary publication of the data for March from the University of Michigan's Consumer Survey Center showed that consumer sentiment rose to 97.6 from 95.7 in the previous month. Analysts had forecast an increase to only 97.0.  
  
Data to be released next week:  
  
New Zealand consumer survey, UK houseprice, Germany PPI, U.S. national activity index and Canada wholesale sales on Monday. Japan's financial markets will be closed for Vernal Equinox Day holdiday.  
  
Australia house price, Swiss trade balance, UK CPI, core CPI, RPI, PPI input, PPI output, PPI core output, PSNB, PSNCR, CBI trends, Canada retail sales, U.S. current account and redbook retail sales on Tuesday.  
  
Australia leading index, Japan exports, imports, trade balance, EU current account, U.S. monthly home price and existing home sales on Wednesday.  
  
RBNZ rate decision, German consumer sentiment, France business climate, UK retail sales, U.S. jobless claims and new home sales on Thursday.  
  
Japan manufacturing PMI, leading economic index, France GDP, manufacturing PMI, services PMI, Germany manufacturing PMI, services PMI, Italy trade balance, EU manufacturing PMI, services PMI, UK mortgage approvals, U.S. durable goods, manufacturing PMI, services PMI and Canada CPI on Friday.