Theresa May and FED Chair Powell Keep the GBP and USD in Focus

Earlier in the Day:

There were no material stats scheduled for release through the Asian session this morning. The lack of data left the markets to consider what lies ahead for the day while responding to the market moves through the U.S session.

At the time of writing, the Kiwi Dollar was down by 0.04% to $0.6881. 4^th quarter retail sales figures, released on Monday, provided support to the RBNZ’s outlook on economic growth for the current year. Throw in the prospects of a U.S – China trade agreement and the bulls will be eyeing $0.700 levels should all go to plan.

For the Aussie Dollar, it was deeper into the red. A number of dovish forecasts on the monetary policy front from the start of the week weighed. At the time of writing, the Aussie Dollar was down 0.18% at $0.7154. Whether China’s economy can turn it around off the back of a trade agreement may be wishful thinking. Economic indicators are beginning to flash red in a number of economies at the turn of the year.

Risk appetite at the start of the week had pinned back the Japanese Yen. At the time of writing, the Japanese Yen stood at ¥110.82, up 0.22% against the U.S Dollar, as risk sentiment deteriorated early on.

The Day Ahead:

For the EUR

Economic data scheduled for release is limited to March consumer climate figures out of Germany. Forecasts are for consumer sentiment to weaken for March. Economic indicators out of Germany have been far from impressive. Further weakness in the numbers could begin to take its toll on the EUR once the risk on moves has filtered through from trade negotiations.

Outside of the data, ECB’s   Mersch is scheduled to speak later in the day. Some chatter over the possibility of a shift in forward guidance on policy will make the EUR particularly sensitive to member commentary. The combination of a worsening economic outlook and more dovish ECB suggests a slide through $1.12 levels is imminent should output not pick up going into the 2^nd quarter.

At the time of writing, the EUR down 0.01% at $1.1357.

For the Pound

It’s another quiet day on the economic data front. Economic data scheduled for release is limited to gross mortgage approvals. The mortgage approval figures are likely to be brushed aside by the markets. The focus will continue to be on Brexit. Interestingly, the Labour Party have said that they would back a 2^nd referendum.

If British PM fails to bring an acceptable deal to the table, Jeremy Corbyn may find himself at number 10 off the back of a no-confidence vote and snap election.

Aside from Brexit, today’s inflation hearings and BoE FPC meeting will also garner some attention.

At the time of writing, the Pound was up by 0.23% at $1.3127.The upside comes on hopes that Britain would avoid a no-deal departure from the EU.

Across the Pond

It’s a big day for the Greenback. Economic data scheduled for release includes December housing sector numbers and February consumer confidence figures.

On the data front, we would expect the focus to be on the consumer confidence numbers, forecasted to be Dollar positive.

Outside of the numbers, FED Chair Powell’s testimony will be the key driver for the U.S Dollar. The testimony to the Senate Banking Committee has had a history of influence on the Dollar. This time around, the focus will likely be on how the FED plans to bring an end to the balance sheet sell-down. Additionally, for how long the FED will need to remain patient on rates will also influence.

Economic indicators have continued to raise red flags. Any raised concerns over the U.S economic outlook and expect safe haven demand to pick up.

While Powell will be doing all the talking, U.S President Trump could be doing all the tweeting. Trump’s attitudes towards the FED suggests that any hints of an extended pause will be well received. On the flip side, expect some negative tweets should Powell raise concerns over the economic outlook.

At the time of writing, the Dollar Spot Index was down by 0.02% to 96.397.

For the Loonie

It’s another quiet day on the economic data front. While risk appetite supported riskier assets, crude oil prices slumped at the start of the week. Trump’s Tweeter did all the damage, leading to a 3.1% slide in WTI and a 3.5% slide in Brent on Monday. Trump’s Tweet “Oil prices getting too high. OPEC, please relax and take it easy. World cannot take a price hike – fragile!”

The slide in oil prices weighed on the Loonie, which ended Monday with a 0.4% loss against the Dollar.

BoC Governor Poloz won’t be thanking the U.S President anytime soon for the Tweet, with the reversal in crude oil prices have led to a shift in monetary policy.

For the day ahead, we can expect crude oil prices to remain the key driver. This evening’s API numbers and market risk sentiment will likely be of influence.

The Loonie was down 0.10% to C$1.3200, against the U.S Dollar, at the time of writing.