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US Dollar May Fall as Fed-Speak Underpins Bets on Rate Hike Delay

US Dollar May Fall as Fed-Speak Underpins Bets on Rate Hike Delay

Talking Points:

  • Euro Unlikely to Find Follow-Through in Upbeat German IFO Survey Data
  • US Dollar May Decline as Fed Commentary Supports Dovish Outlook Shift
  • New Zealand Dollar Underperforms on Soft Trade Balance Data Overnight

Germany’s IFO Survey of business confidence headlines the economic calendar in European trading hours. The forward-looking Expectations index is expected to rise for the fifth consecutive month in March, registering at the highest level since July. The outcome seems unlikely to offer much by way of lasting Euro volatility however considering the results’ limited impact on the near-term ECB policy outlook. Indeed, sentiment may be improving because the central bank has expanded stimulus efforts, which hardly seems like a supportive narrative for the single currency.

Later in the day, “Fed-speak” returns to the spotlight as Charles Evans – the President of the central bank’s Chicago branch – takes to the wires. Traders pushed out the likely timeline for the first post-QE rate interest hike after last week’s FOMC meeting, with Fed Funds futures now pointing to an increase in September (versus the June/July consensus prevailing ahead of the Fed announcement). Rhetoric supporting thisshift from the typically dovish Mr. Evans may weigh on the US Dollar.

The New Zealand Dollar underperformed in overnight trade, falling as much as 0.3 percent on average against its top counterparts. The move followed a disappointing Trade Balance data set that put the year-to-date deficit a –NZ$2.18 billion in February, the highest since August 2009. The British Pound corrected broadly higher after sinking against all of the majors yesterday on the back of soft CPI figures, as expected. The Japanese Yen likewise advanced on regional haven flows as the benchmark Nikkei 225 stock index declined.


Asia Session

21:45NZDTrade Balance (NZ$) (FEB)50M350M33M
21:45NZDTrade Balance YTD (NZ$) (FEB)-2181M-1850M-1434M
21:45NZDExports (NZ$) (FEB)3.92B4.10B3.68B
21:45NZDImports (NZ$) (FEB)3.87B3.70B3.64B
23:50JPYPPI Services (YoY) (FEB)3.3%3.3%3.5%
0:00AUDSkilled Vacancies (MoM) (FEB)0.2%-0.4%
1:45CNYWestpac-MNI Consumer Sentiment (MAR)114.7-112.0

European Session

7:00CHFUBS Consumption Indicator (FEB)-1.24Low
9:00EURGerman IFO - Business Climate (MAR)107.3106.8Medium
9:00EURGerman IFO - Current Assessment (MAR)112.0111.3Medium
9:00EURGerman IFO - Expectations (MAR)103.0102.5Medium
9:30GBPBBA Loans for House Purchase (FEB)3665036394Low

Critical Levels

CCYSupp 3Supp 2Supp 1Pivot PointRes 1Res 2Res 3

--- Written by Ilya Spivak, Currency Strategist for

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.