Talking Points:
- Euro unlikely to find lasting volatility in ECB policy announcement
- US Dollar retraced after rallying on returning rate hike speculation
- Australian, New Zealand Dollars edge up as US bond yields recede
The ECB monetary policy announcement headlines the economic calendar in European trading hours. The central bank is widely expected to keep things steady. This makes sense: overall economic data has been reasonably solid and inflation has accelerated since Mario Draghi and company re-jigged policy in December. Officials probably have little reason to rock the boat for the time being, taking time to see how risks including US fiscal policy as well as elections in the Netherlands and France play out. The press conference with Mr Draghi following the conclave may spur a degree of near-term Euro volatility but follow-through will probably prove hard to come by.
Currency market activity was relatively subdued in Asian trade. The US Dollar corrected lower having managed an aggressive recovery alongside Treasury bond yields in the prior session, buoyed by the returning rate hike speculation. This appeared to be triggered by hawkish comments from Dallas Fed President Robert Kaplan, now an FOMC voter, as well as Chair Janet Yellen. The yield-sensitive Australian and New Zealand Dollars outperformed overnight as US borrowing costs mirrored the greenback’s retracement. The British Pound edged up as prices continue to digest in the aftermath of UK Prime Minister Theresa May’s Brexit strategy speech.
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Asia Session
European Session
** All times listed in GMT. See the full DailyFX economic calendar here.
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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