The new US administration still hasn't fired its first real salvos in the FX war but comments today revealed they are coming. The pound was the top performer while the euro lagged. Australian job openings and wages data is due later. The Premium shorts in oil and the Dax were both stopped out. A new note was issued on the existing gold and JPY trades.
Mnuchin introduced himself to the IMF's Lagarde today and the Treasury had a short recap of the call. Notably, it said that the new Treasury Secretary “underscored his expectation that the IMF provide frank and candid analysis of the exchange rate policies of IMF member countries.”
The comments are another signal that Trump and his team are preparing a new strategy on the currency market.
At the same time, the Fed is coming into increasing focus with the March meeting now three weeks away and the market pricing a 38% chance of a cut. There's a very real chance we go into this meeting unsure about what will happen. Harker pointed to data on inflation and GDP as key to his outlook and hinted that it would take some weak data to dissuade him from supporting a hike.
The market is also beginning to refocus on the numbers. The Markit services and manufacturing PMIs both missed estimates on Tuesday and weighed on the USD dollar lower, but the currency remains well off its lows. Existing home sales and the FOMC Minutes are due Wednesday.
Turning to Asia-Pacific trading, Australia is in focus. Note that AUD/USD quickly recovered Tuesday despite the broad US dollar bid. It remains near the top of its recent range and specs have slowly been building.
On the docket first is the 0000 GMT report on January skilled vacancies. The prior reading was 0.2%.
Reports that are more-likely to move the market hit 30 minutes later with the Q4 wage price index expected to rise 0.5% w/w and Q4 construction work done forecast to rise 0.5%.
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