U.S. Dollar – The dollar index is 0.4% weaker despite gains for the greenback against the pound and yen. The real focus today remains on the euro where investors are buying into that string of monetary tightening that might be dashed as soon as the ECB discusses its stance following the lunchtime press conference in Frankfurt on Thursday. The FOMC minutes did little to undo the theory that members will have plenty to fight over at April’s monetary policy meeting. Still, investors recognize that while the ECB will change policy tomorrow, the Fed has several steps to take in removing barriers before policy rates can officially move higher.
Aussie dollar – The local dollar is higher propelled by carry-trade plays with market talk of Aussie/yen purchases by large names and central bank interest in Aussie government paper. A seven-year auction of such paper yielding 5.5% has more than five-times oversubscribed according to the debt management office. The Aussie rose strongly in overnight trading to buy $1.0395 and so remains near its all-time high. Data showed home loans during February declined by 5.6% but was largely discounted on account of the impact of flooding and cyclones.
Canadian dollar – Risk appetite is on, commodities and equities are gaining in value and speculative forces are producing windfall revenues for Canadian oil producers. The surging Canadian dollar keeps moving ahead and once again hit a four-year high on Wednesday. The unit today extended its gain to $1.0415 U.S. cents. Later this morning investors will learn of the impact on manufacturers from the strong currency in the Ivey PMI series for March.
Andrew Wilkinson is a Senior Market Analyst at Interactive Brokers LLC
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