The dollar sold off overnight, leading to a 0.63% decline in the U.S. Dollar Index, now trading at 102.98. Short-term support near 103.00 has prevented further dollar weakness but looks vulnerable to a break and test of lower support at 102.75. The dollar is lower vs. all G-10 currencies, notable declines: -0.96% vs. JPY, -0.95% vs. CHF, -0.63% vs. NZD, and -0.56% vs. EUR & GBP.
JPY is higher following a surge in Japan bond yields as traders adjust positions on expectations of a Bank of Japan rate hike. And today’s GBP strength was sparked by better-than-expected preliminary PMI data for January.
U.S. Treasury yields are lower in all tenors, the biggest declines in the 5-10 year tenors, 10-year -0.04%.
The Bank of Canada will announce its interest rate policy today. While no change is expected to the current 5% target rate, the policy statement will be closely read for hints of a more hawkish tone.
The U.S. economic calendar is light today but has a full schedule of data releases tomorrow: Annualized GDP, Core PCE Price Index (a Fed favorite), Durable Goods, Weekly Jobless Claims (following last week’s 16-month low), and New Home Sales.
Trump won yesterday’s New Hampshire primary with 54.5% of the GOP’s primary votes, and set the tone for upcoming primaries by vowing to ‘get even’ with Nikki Haley who received 43.2% of the total votes and intends to stay in the race.
