The US dollar enjoyed a strong rally against its peers as economic reports turned out stronger than expected and underscored the Fed’s tightening bias. Initial jobless claims fell from 282K to 259K versus the projected 302K figure while the Philly Fed index rose from 18.9 to 23.8. US flash manufacturing and services PMI are due next.
The euro was able to regain ground as European equities closed in the green as Draghi sounded more upbeat about the fiscal recovery in the region. In his testimony, he mentioned that the financial system poses a lower risk to the economy. Euro zone PMI readings are due next and strong figures from Germany and France could allow the shared currency to keep climbing.
The pound broke higher to most of its counterparts on anticipation for PM May’s speech as she reportedly might offer 20 billion EUR in a transitional deal with the EU in hopes of speeding up negotiations. It also could convince the bloc to concede to maintaining access to the single market and other conditions that could favor the UK.
The franc regained some ground as risk appetite took a hit after the Fed decision. The Swiss trade balance, however, turned out weaker than expected at 2.17 billion CHF versus the projected 2.41 billion CHF reading. There are no reports due from the Swiss economy today so the franc could be more sensitive to market sentiment.
The yen edged slightly lower after the BOJ decision as the central bank maintained interest rates at current levels and kept the pace of JGB purchases unchanged. The central bank also kept a slight easing bias as hinted by Governor Kuroda during the presser. There are no reports due from Japan today so risk sentiment could be the main driver for the yen pairs.
Commodity Currencies (AUD, NZD, CAD)
The comdolls took huge hits in previous trading sessions as the impact of Fed tightening dawned on commodities. Canadian wholesale sales posted a stronger than expected 1.5% gain versus the estimated 0.7% drop, sending positive vibes ahead of the retail sales and CPI releases today. Analysts are expecting to see a 0.2% increase in headline retail sales and a 0.4% uptick for the core figure. New Zealand will be having its parliamentary elections next.