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Fed-Speak Back in Focus as US Dollar Digests Drop to 2-Week Low

Fed-Speak Back in Focus as US Dollar Digests Drop to 2-Week Low

Ilya Spivak,

Talking Points:

  • US Dollar corrected higher overnight after hitting two-week low vs. majors
  • Euro may look past Eurozone CPI data on limited implication for ECB bets
  • Fed-speak back in focus, Evans and Dudley may talk up rate hike outlook

The US Dollar traded broadly higher against its major counterparts in overnight trade as prices corrected after dropping to a two-week low in yesterday’s session. That move followed comments from Fed Chair Janet Yellen that traders (rightly or wrongly) perceived as diminishing the scope for interest rate hikes in 2016. The Japanese Yen diverged from its G10 FX counterparts, managing to narrowly gain against the greenback. The currency’s resilience may reflect a steep skew in overnight borrowing costs ahead of Japan’s fiscal year end.

The preliminary set of March Eurozone CPI figures headlines the data docket in European trading hours. The core year-on-year inflation rate is expected to edge higher to 0.9 percent. If the analogous German figures released yesterday prove telling, an upside surprise could be in store. Such a result seems unlikely to meaningfully buoy the Euro however considering it will hardly discourage the ECB from pursuing the aggressive stimulus effort that policy makers unveiled earlier this month.

The spotlight turns back to Fed-speak later in the day as comments from Chicago and New Fed Presidents Charles Evans and Bill Dudley cross the wires. The tone ought to be familiar, with both officials citing domestic progress toward the central bank’s objectives but warning against potentially disruptive external developments. If this is part of a coordinated communication effort aimed at realigning official and market-based policy bets (as we suspect), the pair may likewise push back a bit against the decidedly dovish interpretations of Yellen’s remarks.

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Asia Session

23:01GBPLloyds Business Barometer (MAR)43-28
23:05GBPGfK Consumer Confidence (MAR)0-10
00:00AUDHIA New Home Sales (MoM) (FEB)-5.3%-0.6%
00:00NZDANZ Activity Outlook (MAR)29.4-25.5
00:00NZDANZ Business Confidence (MAR)3.2-7.1
00:30AUDJob Vacancies (FEB)2.7%-4.0%
00:30AUDPrivate Sector Credit (MoM) (FEB)0.6%0.5%0.5%
00:30AUDPrivate Sector Credit (YoY) (FEB)6.6%6.5%6.5%
02:00NZDMoney Supply M3 (YoY) (FEB)7.3%-7.6%
05:00JPYHousing Starts (YoY) (FEB)7.8%-2.4%0.2%
05:00JPYAnnualized Housing Starts (FEB)0.974m0.880m0.873m
05:00JPYConstruction Orders (YoY) (FEB)-12.4%--13.8%

European Session

06:00EURGerman Retail Sales (MoM) (FEB)0.4%-0.1%Low
06:00EURGerman Retail Sales (YoY) (FEB)2.2%-0.8%Low
07:00GBPBOE’s Carney Speaks at FSB Briefing--Medium
07:00EURIMF's Lagarde, PBOC's Zhou Speak in Paris--Medium
07:55EURGerman Unemployment Change (000's) (MAR)-6k-10kMedium
07:55EURGerman Unemployment Claims Rate SA (MAR)6.2%6.2%Medium
08:30GBPNet Consumer Credit (FEB)1.3b1.6bLow
08:30GBPNet Lending Sec. on Dwellings (FEB)3.6b3.7bLow
08:30GBPMortgage Approvals (FEB)73.5k74.6kLow
08:30GBPM4 Money Supply (MoM) (FEB)-0.0%Low
08:30GBPM4 Money Supply (YoY) (FEB)-0.8%Low
08:30GBPM4 Ex IOFCs 3M Annualised (FEB)4.0%4.3%Low
08:30GBPGDP (QoQ) (4Q F)0.5%0.5%Medium
08:30GBPGDP (YoY) (4Q F)1.9%1.9%Medium
08:30GBPCurrent Account Balance (4Q)-21.2b-17.5bLow
08:30GBPIndex of Services (MoM) (JAN)0.2%0.2%Low
08:30GBPIndex of Services (3M/3M) (JAN)0.8%0.7%Low
08:30GBPTotal Business Investment (QoQ) (4Q F)--2.1%Low
08:30GBPTotal Business Investment (YoY) (4Q F)-2.4%Low
09:00EUREurozone CPI Estimate (YoY) (MAR)-0.1%-0.2%High
09:00EUREurozone CPI Core (YoY) (MAR A)0.9%0.8%High

Critical Levels

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

--- Written by Ilya Spivak, Currency Strategist for

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