The USD/CAD has had a quiet Asia session, trading into 1.2835.
The pair managed to reverse its USD-bullish direction in Wednesday's trading and knock back away from the 1.2900 level which the USD/CAD has made a beeline for since bottoming near 1.2525.
BOC's Poloz: cautiously positive on Canadian economy
The CAD developed some bullish momentum, but wasn't able to continue the push into Thursday after the Bank of Canada's Governor Poloz testified in the Candian Parliament, where he gave the BoC's take on the Candian economy. Poloz didn't cover any new material and, while he remains upbeat about the economy, he did highlight several key weak points that the CAD will struggle to overcome, namely low oil prices suppressing both the CAD and economic growth, as well as uncertainty surrounding the current NAFTA renegotiations.
Thursday is a quiet showing for the pair, but Friday will be bringing US preliminary GDP figures at 12:30 GMT, and annualized QoQ GDP is expected at 2.3%, a decline from the previous reading of 2.9%.
After testing fresh lows in the 1.2160 region on Wednesday, EUR/USD managed to get some attention and is now posting some gains in the 1.2170/75 band.
EUR/USD all the attention on ECB
The pair remains entrenched into the negative territory on Thursday, navigating the lower bound of the consolidative range that has been in play since January, where it seems to have emerged some interim contention.
The upcoming ECB meeting should be key in either breaking below the range or attempt a recovery. However, odds so far are tilted to the first option, as the Council and the subsequent press conference by President M.Draghi are seen on the dovish side.
Market sentiment, in the meantime, remains biased towards the greenback amidst US 10-year yields advancing and staying above the psychological 3.0% mark and the US Dollar Index (DXY) looking to consolidate above the recently broken 91.00 barrier.
According to analysts at Danske Bank, now is the time for the Riksbank to make another shift of the rate path by pushing hikes further out in the future, presumably until the first quarter of 2019.
“Observe that in a sense the Riksbank is working with two different time perspectives. The forecast horizon is three years and, in this case, macro assumptions are key. To put it differently, the Phillips curve is key. In short, above-trend growth should (eventually) lead to higher wage increases and hence higher inflation.”
“We see no particular reason for the Riksbank to paint a less optimistic picture for growth than in February. It will probably mention possible disruptions related to trade conflicts as a downside risk but not more than that. In addition, we believe the Riksbank will probably not sound more concerned about the housing market than previously. So, growth close to 3.0% and around 2.0% in 2019-20, in line with the February projection, seems like a fair guessto us.”
“So, if the Riksbank was close to delaying hikes in February, we think now is the time to pull the trigger. The current rate path indicates a first rate hike in Q3. Considering the announcement dates in Q3 and that the efficient date is from Wednesday the week after the announcement, it would require a rather odd hike in basis points (depending on July or September) to reach an exact average of -0.40% as suggested by the current forecast. However, making such exact calculations is probably to exaggerate. The Riksbank forecast is more of an indication. Pushing out hikes one quarter (i.e. to October or December) would not, as we see it, give the Riksbank much more leeway to assess the situation and this is why we think a further delay is more likely.”
The NZD/USD is still touching into the bottoms, playing near 0.7060 in the Asia session.
The Kiwi has had a rough run against the US Dollar lately, declining for seven straight trading days as the Greenback gets boosted by rising US Treasury yields.
Thursday's Trade Balance figures for New Zealand drop at 22:45 GMT, with the headline MoM Trade Balance for March forecast at $200 million, a slight decline from the previous figure of $217 million, but with a large chunk of the macro figures coming out of New Zealand happening to miss the mark, a miss for expectations could be on the cards.
Friday will be the ringer for the week, capping off the action with preliminary GDP figures from the US hitting markets at 12:30 GMT. Annualized QoQ GDP for the US is expected to come in at 2.3% versus the previous 2.9%, and while a softening economic outlook for the first quarter has been anticipated, a miss for the figure could see serious derailment in the current US Dollar trend.
NZD/USD Levels to watch
Analysts at Citigroup offer their insights on the Bank of Japan (BoJ) policy decision due tomorrow.
“We don't expect any fireworks.
The projected timing for reaching the 2% inflation target in the Outlook Report will likely be kept at around FY2019.
Some observers are paying attention to whether new deputy governor Masazumi Wakatabe, who is considered a reflationist, will vote against current policy and propose new additional easing.”
The USD/JPY is sticking close to fresh highs made in the overnight session, trading near 109.30 ahead of the European market rollover.
USD/JPY: Will it follow rate spreads? – Nomura
The Greenback has run up against the Yen for six consecutive trading days as the USD gets bolstered by rising US Treasury yields, and with all eyes on the US GDP figures slated for Friday, little is expected to change as the pair follows rate spreads up the charts.
Thursday sees a healthy smattering of Japan data points for the JPY, all dropping between 23:30 and 23:50 GMT, but the notable figure in the bunch is Tokyo Core CPI, anticipated to hold steady at 0.8%, while the big figure this week will be the Bank of Japan's rate decision and Press Conference at 023:00 GMT early on Friday. With the BoJ still inured in super-easy monetary policy, a rate hike is not expected anytime soon, but traders will be keeping a close eye as they wait and hope for signs of the BoJ to begin 'tapering off' their QE program as markets and members of the Japanese government begin to grow tired of the BoJ's inability to generate interest in the back of hyper-easing.
Japanese gov't minister: BoJ needs to drop 2% target