Posted on March 9, 2015 by the XM Investment Research Desk at 7:55 am GMT
The dollar recoiled somewhat from multi-year highs against the euro and corrected against the yen, as some profit-taking set in. The yen was also maybe boosted by some profit-taking in risk assets, as the prospect of higher US rates sooner, has dampened risk sentiment. The shift in interest rate expectations and the sharp gains in US Treasury yields, was very helpful to dollar bulls as they pushed the greenback higher.
A little after the open of Asian trading, the euro dipped to fresh 11 ½ year lows of 1.0821, but managed to rebound to 1.0863 near the start of trading in Europe. The Eurogroup meeting of Eurozone finance ministers should attract a lot of attention today, as Greece’s proposed reforms will be discussed. In addition, the ECB will launch its Quantitative Easing program today; a factor that could weigh on the euro but that has also already been discounted to a large extent.
The yen managed to recoup some ground after Friday’s spike to a near 3-month high of 121.27 and dollar / yen was pushed below 121 to 120.88. The revision to Japanese 4th quarter GDP was negative as it was announced at 0.4% quarter-on-quarter versus a previous estimate of 0.6%. Private consumption appeared to be doing well in Japan but business spending was revised to a negative 0.1% from a positive 0.1%, which shows that businesses remained reluctant to invest. January trade deficit was smaller-than-expected but the current account surplus was also smaller-than-anticipated.
In other news out of Asia, Chinese exports during February beat expectations by rising a huge 48.3% year-on-year although imports tumbled 20.5%. Seasonal factors such as the timing of the Lunar New Year often distorts Chinese trade numbers around January- February.
Looking ahead to the remainder of the day, Eurozone Sentix investor confidence, Swiss sight deposits and Canadian housing starts will attract some attention. Central bank officials from the UK (Andrew), the Eurozone (Weidmann) and the United States (Mester) could provide some additional action, although the US interest rate outlook and the Eurogroup on Greece will be the main themese on the minds of many traders.