Forex today: BoE, BoC in question, N.Korea back on the radar, yields/stocks up

Forex today was filled with headlines relating to N.Korea/US leaders meeting, probably in June, UK data misses and BoE toned down prospects, BoC, diminishing trade war concerns and positive earnings on Wall Street. US Stocks have continued to rally,  (DJIA looking in at 100-D SMA,  S&P is through the 100-D SMA). The dollar was subsequently trading between 89.448 - 89.777, slightly higher on the day +0.10%, closing the NY session at 89.60.

As for the other currencies, the single unit remained confined to a 1.2340-1.2400 range while the final Eurozone March headline CPI dipped slightly from its initial release to 1.3% y/y (from 1.4%). Core inflation was unchanged at 1.0%, ECB likely to acknowledge the lack of inflationary pressures and pull the reigns in with respect to policy guidance next week. 

Sterling was on the back foot due to the recent data disappointments with firstly, the UK wages yesterday and now the Tues CPI miss which markets dumped the pound on given the cause to rethink rate hike expectations from the BoE. GBP was sent from 1.4314 down to  1.4173 (six-day low) in London and then closed  NY at 1.4210 down 0.57%. Retail sales are the next data to watch on Thursday. 

The cross was up to 0.8723 in early trade in the US shift. EUR/GBP ended North America at 0.8715 within a range of between 0.8695-0.8723. The cross garnered its strength on the UK data misses and prospects of a slower BoE path of hikes and hints of ECB normalisation catching up on the pound. 

USD/JPY ranged within familiar territories between 107.10 and 107.40, ignoring higher US yields - as short and long maturity US treasury rates climbed. The benchmark 10yr yield climbed from 2.82% to 2.87% while 2yr yields extended their multi-year uptrend to 2.43% - another high since 2008. the Fed fund futures yields still price the chance of the next rate hike in June at around a 90% probability. 

The Bank of Canada held its policy rate at 1.25%, noting progress on inflation and wage growth. The bank's message to markets was that “higher interest rates will be warranted over time.” However, markets are still cautious around NFTA and US / Chinese trade relations. USD/CAD rallied from 1.2550 to 1.2660.

As for the rest of the commodity bloc, it was a positive day for metals, with copper following suit of the Shanghai bounce,  gold up in sympathy testing the upper end of the range while oil was bid on the inventory draw, testing fresh highs on the $68 handle. On the back of all this, the Aussie was outperforming. AUD/USD bounced from the 10-D SMA in Europe on dollar weakness that followed through in NY as well. The pair pierced the 55-D SMA before the greenback picked up a bid and the Aussie closed at 0.7780 from a 0.7755 NY open. 

Key notes from US session:

Fundamental and political wrap: N.Korea back on the map and GBP/USD vulnerable towards 21-D SMA

Wall Street stocks mixed, energy sector leading as crude oil soars

Key events ahead:

Analysts at Westpac offered their foresight for the day's key events as follows: 

"Australia’s data highlight for the week is March labour force at 11:30amSyd/9:30am Sing/HK. Employment is expected to rise for an 18th consecutive month, extending the record. Westpac’s 20k forecast is in line with consensus, with forecasts on Bloomberg ranging from +10k to +30k. A 20k rise in total jobs would leave annual job creation at a still very steep 3.2%, a pace highly likely to slow in the months ahead. We look for the unemployment rate to hold at 5.6%, versus consensus for 5.5%. After such a strong year of job growth, a surprise weak number today seems unlikely to have a lasting impact on markets."