As we enter the Fed blackout period, forex today was mostly awaiting the US CPI and retails sales data to follow in upcoming sessions, but the dollar was mixed with lower yields across the board despite the recent attention to the LIBOR/OIS spread.
The US three and ten-year treasury auction was coming in line with the market. The US 10yr treasury yield dropped from 2.90% to below 2.87% with US equities slowing up. The Fed fund futures were still pricing three more hikes by end-2018 and another hike in 2019. The higher beats rolled over while the commodities dipped due to oil off about 1.4%. Gold dropped 0.2% to close at $1321/oz.
The single currency was opening in the NY session around 1.2310 after the dollar firmed in the European shift where bears capped the bid at 1.2340. The bear pressure continued and the euro was sent packing down to below the 1.23 handle to 1.2294 the low. However, the yen crosses were back in play and EUR/JPY's rally lifted EUR/USD to 1.2345 and for a close of 1.2334 while markets get set for Tuesday's CPI data.
GBP/USD ran into headwinds at 1.3907 on dollar strength in London and opened NY around the figure for a further gain to 1.3917 before a 1.3904 close. Eyes will be on Brexit headlines again throughout the month while we await the meeting between officials towards the end of the month on the 22/23rd March. However, the pound can find support on rate hike expectations from the BoE.
EUR/GBP was caught between dollar flows and entered NY after making a low of 0.8849. The cross traded between a range of 0.8885-0.885 and ended the session -0.13%. In London, traders heard that a "No deal" Brexit could cost the UK, EU companies 58 bln pounds while UK's Hammond sees the light at end of austerity tunnel, warning that debt levels must fall.
USD/JPY noise stuck with the Moritomo scandal, (imparting Japanese stocks), while focus stayed with N.Korea and trade wars while US yields recovered post-NFP negativity in the wages report. USD/JPY was stuck in a 106.35/73 range and struggled around the 21-D SMA at 106.75, piercing the descending resistance of the steep channel from 113.38 Jan 2018 highs while traders await US CPI and retail sales this week.
As for the antipodeans, the Kiwi hit a low of 0.7285 before a bid into the close, bringing the price up to a more respectable 0.7290 level for the handover in early Asia. AUD/USD opened near 0.7860 in the consolidation of the European recovery rally that made a high of 0.7874 before moving up to 0.7879.
Key notes from the US session:
DXY underwater on nonfarm payrolls, but, watch the Libor/ OIS spread
Key events coming up:
Analysts at Westpac explained the days key events in a snapshot as follows: "Australia’s data calendar features Jan housing finance approvals and Feb business confidence from NAB (11:30am Syd/8:30am Sing/HK). We look for -1% m/m on total home loan approvals, though January is heavily affected by summer holidays so we wouldn’t draw strong conclusions from the data.
The RBA last week noted strong business confidence supporting its optimism over non-mining business investment. The NAB business conditions index was 19 in Jan, compared to a 25 year average of 5.4, while the confidence index was 12, versus a 5.9 average in the same time.
US Feb CPI is the key US data release. The consensus is 0.2 m/m, for annual rates of 2.2% overall and 1.8% excluding food and energy. Bear in mind that the Fed views this measure as overstating inflation, so focuses on the PCE deflator which remains clearly short of the 2% target."
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD fluctuates near 1.0700 after US data
EUR/USD stays in a consolidation phase at around 1.0700 in the American session on Wednesday. The data from the US showed a strong increase in Durable Goods Orders, supporting the USD and making it difficult for the pair to gain traction.
USD/JPY refreshes 34-year high, attacks 155.00 as intervention risks loom
USD/JPY is renewing a multi-decade high, closing in on 155.00. Traders turn cautious on heightened risks of Japan's FX intervention. Broad US Dollar rebound aids the upside in the major. US Durable Goods data are next on tap.
Gold stays in consolidation above $2,300
Gold finds it difficult to stage a rebound midweek following Monday's sharp decline but manages to hold above $2,300. The benchmark 10-year US Treasury bond yield stays in the green above 4.6% after US data, not allowing the pair to turn north.
Worldcoin looks set for comeback despite Nvidia’s 22% crash Premium
Worldcoin price is in a better position than last week's and shows signs of a potential comeback. This development occurs amid the sharp decline in the valuation of the popular GPU manufacturer Nvidia.
Three fundamentals for the week: US GDP, BoJ and the Fed's favorite inflation gauge stand out Premium
While it is hard to predict when geopolitical news erupts, the level of tension is lower – allowing for key data to have its say. This week's US figures are set to shape the Federal Reserve's decision next week – and the Bank of Japan may struggle to halt the Yen's deterioration.