The US dollar rebounded against most of its counterparts in recent sessions but analysts have doubts that it can hold on to its winnings. Data has been weaker than expected and FOMC officials have warned of the dangers of low inflation. Only initial jobless claims and mortgage delinquencies are due from the US today.
The euro barely drew support from news of a German coalition. Although full details are yet to be revealed, Merkel’s CDU party and CSU allies were able to strike a deal with the SPD. Data has been mixed with German industrial production and French trade balance beating consensus and Italian retail sales falling short. German trade balance and the ECB economic bulletin are due next.
The pound had a mixed performance as it slumped to the dollar and yen but advanced to the comdolls. UK Halifax HPI was actually weaker than expected with a 0.6% fall. Today is Super Thursday for the BOE so additional volatility around the central bank decision, release of MPC minutes, and Inflation Report is expected.
The franc was in a weak spot during the London session but recouped some of its losses as risk aversion returned later on. Swiss foreign currency reserves fell from 744B CHF to 731B CHF, easing intervention fears. There are no reports due from the Swiss economy today.
The yen continued its advance in the latter sessions as risk-off flows returned. Data from Japan was mixed as average cash earnings beat expectations while leading indicators slipped from 108.3% to 107.9%. The 30-year bond auction is scheduled today and any major changes could impact yen pairs once more. The Economy Watchers Sentiment index is also due.
Commodity Currencies (AUD, NZD, CAD)
The Kiwi lagged behind its comdoll peers when the RBNZ maintained its cautious stance and even downgraded Q1 growth forecasts. Governor Spencer didn’t seem too concerned about Kiwi strength as the central bank’s projections hint at a weaker currency down the line. Meanwhile, the Loonie has been a bit more resilient despite weaker crude oil prices on rising inventory and NAFTA concerns. RBA Governor Lowe has a speech coming up.