Headlines:
- EUR/USD tries for a break above 1.1000 again
- ECB policymakers reportedly converging towards 25 bps rate hike in May
- Japan senior lawmaker says appropriate for BOJ to not change YCC for now
- UK February monthly GDP 0.0% vs +0.1% m/m expected
- Germany March final CPI +7.4% vs +7.4% y/y prelim
- Eurozone February industrial production +1.5% vs +1.0% m/m expected
Markets:
- CHF leads, JPY lags on the day
- European equities a little higher; S&P 500 futures up 0.1%
- US 10-year yields up 0.3 bps to 3.424%
- Gold up 0.6% to $2,026.23
- WTI crude down 0.4% to $82.75
- Bitcoin up 0.9% to $30,230
Markets are continuing to digest the US inflation data from yesterday but it seems like the verdict is that the dollar might be set for another round of weakness before the weekend.
EUR/USD is pushing above 1.1000 with the high hitting 1.1030, though there are some large option expiries that could be holding back price action for now. Meanwhile, GBP/USD also jumps up to its highest in ten months above 1.2500 as buyers are angling for a technical break higher as well.
USD/CHF is also sinking to its lowest levels since February 2021, testing waters around 0.8900 now after the drop below 0.9000 in trading yesterday.
Alongside the dollar, the yen is the laggard as bond yields remain little changed on the day. That is seeing the likes of EUR/JPY and CHF/JPY also race to fresh highs for the year at 146.75 and 149.60 respectively.
European equities are holding higher mostly with French stocks leading the charge, as the CAC 40 looks for a breakout upon hitting fresh record highs. That is keeping the commodity currencies slightly higher on the day as well.
If you're wondering why if markets are convinced of a 25 bps rate hike by the Fed in May, that the dollar is still weakening, it's all about what comes next as outlined here.