More Earthquakes & Fukushima At Defcon 7, On Par With Chernobyl - This caused risk aversion sending the Yen, USD, and CHF higher. The market was already getting nervous after Alcoa missed its earnings target after the market closed yesterday. That's all the market needed to induce profit taking after a big move last week in all markets, but I suspect that it will be short-lived with demand for Yen-funded carry trades set to pick up again. In the UK, the GBP fell after annual inflation came in at 4% versus 4.4% forecast and this was on top of yesterday's downgrade of growth by the IMF. This data helped to push back expectations for a rate rise from the Bank of England to October. Meanwhile, the Euro shot up to a 15-month high against the USD as markets are closer to pricing in a further rise in the European Central Bank's main refinancing rate in June, while no interest rate rise is expected in the US this year. In fact, dovish comments from two of the biggest US Federal Reserve doves, Yellen and Dudley, the previous day indicated the Fed is not in any hurry to tighten policy, thus reinforcing the USD's downside potential in the near future. In Canada, the CAD weakened off after the Bank of Canada held its key interest rate steady at 1% this morning, as expected. The BOC repeated its language from the last policy meeting that "any further reduction in monetary policy stimulus would need to be carefully considered," suggesting that the next interest rate hike will not come at the May meeting but rather the July one. The BOC raised it economic growth forecast for this year to 2.9% from 2.4% and projected that it would hit its 2% inflation target six months earlier than previously thought.
Here are the interbank mid-market rates at the time of posting:
EUR/USD 1.4505 USD/CHF 0.8972
GBP/USD 1.6306 USD/CAD 0.9521
AUD/USD 1.0502 EUR/CAD 1.3955
NZD/USD 0.7869 GBP/CAD 1.5690
USD/JPY 84.25 USD/MXN 11.7775
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