North American Summary and Highlights 11 Mar
Overview - After drifting slightly lower in Europe the USD ended higher led by UST yields.
North American session
The USD saw some gains in a mostly quiet US session led by UST yields where the front end led yields higher, despite a respectable 3-year auction reception. The New York Fed’s Survey of Consumer Expectations showed the inflation view more than fully reversing a dip in January, rising to 2.71% fir February’s 3-yaer view from 2.35%, bouncing back above December’s 2.62%.
EUR/YSD saw a low of 1.0915 and USD/JPY a high of 147.16. EUR/GBP edged higher as GBP/USD saw lows below 1287. The commodity currencies saw less change, early gains in USD/CAD above 1.35 failing to hold.
European morning session
The USD drifted slightly lower in European trading, with the main focus remaining the JPY. Speculation of a normalisation of policy on March 19 continues to grow, with news reports that the BOJ is looking at switch from yield curve control to pre announced bond buying and a BOJ policy hike seen as a close call.
A degree of caution exists before the U.S. CPI release, but if no surprises are seen then the expectation is that JPY gains could build towards the end of the week with the BOJ meeting one day before the Fed.
Elsewhere, GBP remains well underpinned on a view that the BOE will be slower than the ECB to ease policy.