FX Today: Antipodeans rally on better data; eyes on UK retail sales, Brexit, BOE

Moderate risk-aversion was witnessed across the financial markets in Asia this Thursday, as looming trade and Brexit uncertainty overshadowed upbeat macro releases from the OZ economies. Meanwhile, the greenback attempted a tepid bounce across its main competitors, as the dust settled over the dovish FOMC aftermath. However, the Treasury yields continued to trade weaker, having capped the relief rally in the USD/JPY pair at 110.75. The Antipodeans did rally on upbeat Q4 GDP and Australian jobs reports but the advance was capped by the reduced demand for risk assets and holiday-thinned light markets. Japanese markets were closed in observance of a national holiday.   

On the commodities front, both crude benchmarks consolidated near 2019 tops while gold prices on Comex extended post-FOMC rally and neared the 1320 barrier.

Key Focus Ahead

Markets today remain focused on the key event risks concerning the British pound, as the UK docket offers the retail sales report at 0930 GMT ahead of the BOE monetary policy decision and the release of the minutes at 1200 GMT. It’s widely expected that the BOE will keep the monetary policy settings unchanged. However, the UK central bank could disappoint the doves by hinting towards a rate hike as the next policy move, in the wake of the recent improved fundamentals and Brexit extension. All eyes will also remain on the Brexit developments, as the UK PM May heads to Brussels to secure the EU support on the short Brexit extension.

Meanwhile, the Swiss National Bank (SNB) quarterly monetary policy assessment is due at 0830 GMT today, but markets expect the event to be a dud, with no surprises anticipated. In the NA session, the usual weekly jobless claims from the US will be reported at 1230 GMT alongside the releases of the Philly Fed manufacturing index and the Canadian ADP jobs and wholesale sales data. At 1500 GMT, the Eurozone consumer confidence gauge will be published that is likely to little impact on the EUR markets.

EUR/USD: Yield spreads hit fresh 11-month lows, risk reversals nearly shed EUR bearish bias

Dovish Fed pushed the yield differentials lower in favor of the EUR, sending EUR/USD to multi-week highs near 1.1440. Markets may have priced in the Fed rate hike pause over the last three months. The USD, therefore, could make a comeback on "buy the fact" trade. 

GBP/USD: UK retail sales, BOE could challenge post-FOMC pullback

The February month retail sales from the UK and monetary policy meeting by the Bank of England (BOE), followed by the US initial jobless claims and Philadelphia Fed manufacturing survey, could gain traders’ attention for further direction.

BOE Preview: No changes now, but Carney could impact GBP/USD in two ways

The BOE is set to leave its policies unchanged, with the interest rate at 0.75% and the Quantitative Easing program at £435 billion. However, the Meeting Minutes from the Monetary Policy Committee will be of interest. A unanimous 9:0 vote is on the cards.