North American Summary and Highlights 20 Mar

North American session

The USD reversed European gains heading into the FOMC, with no significant data released, with EUR, GBP and AUD back to near European opening levels. CAD outperformed a touch, largely before BoC minutes from March 6 showed little urgency to cut rates, while USD/JPY saw little change.

The USD slipped on the FOMC announcement where the statement was little changed and the 2024 dots still showed 75bps of easing, though with the 2025 dots showing 75bps rather than 100bps of easing the initial USD losses faded before Powell’s press conference began. Powell gave few hawkish signals, notably still seeing a declining trend in inflation despite the January and February disappointments, and the USD saw renewed slippage. USD/JPY saw lows below 151 before a modest correction while EUR/USD rose to 1.0920 with no significant correction, with GBP, AUD and CAD all showing similar moves. 

European morning session

The USD made gains across the board through the European morning, with EUR/USD dropping around 30 pips to 1.0840. Scandis fell further, EUR/SEK gaining 4 figures to 11.38 and EUR/NOK 2 to 11.59. Other European currencies kept pace with the EUR and AUD also fell in line, but CAD and JPY were a little less weak, with USD/CAD and USD/JPY both seeing gains of 20 pips. 

Newswise UK CPI data was the main release, and this came out slightly below market consensus at 3.4% y/y headline, 4.5% core. The data is unlikely to make the BoE undergo a major change in thinking, but there may be no further dissent in favour of more hikes.  Looking ahead, it is notable that favourable base effects and the drop in the energy cap should bring headline inflation down to even a touch below the 2% target by April. GBP initially fell slightly on the release, but recovered quickly to be little changed against the EUR.