Dollar and Treasury yields higher, stocks lower ahead of Fed meeting today
The dollar is broadly higher, US 10-Yr Treasury yields edged up 3 bps to 1.66%, and global stocks are lower ahead of today’s Fed meeting. Although the Fed is expected to keep its monetary policy steady, global investors eagerly await Fed Chair Powell’s outlook for the economy (the press conference is at 2:30pm EST) amid market expectations of strong economic growth and higher inflation. Pressure on tech-heavy NASDAQ stocks was seen overnight, as tech stocks are perceived as more vulnerable to higher rates and inflation. Commodity prices are generally lower, oil dropping for its fourth straight day.
March 17, 2021
EUR/USD 1.1905 GBP/USD 1.3900 USD/CAD 1.2473 AUD/USD 0.7721 USD/JPY 109.1700 USD/CNH 6.5034 USD/ILS 3.2912 USD/MXN 20.7084 USD/CHF 0.9281 USD/INR 72.5450 USD/BRL 5.6649 USD/SGD 1.3465 USD/DKK 6.2443 USD/SEK 8.5106 USD/NOK 8.4928
The dollar is broadly higher, as soaring US Treasury yields increasingly attract global bond investors. Most importantly, the Fed’s FOMC announces its monetary policy decision today at 2pm. There is little chance of a change in interest rates or to its $120bn per month asset purchases. Investors will be more focused on the 2:30pm press conference, when Fed Chair Powell will discuss its Summary of Economic Projections (SEP) and insight into when the Fed expects to hike rates.GBP
The UK pound was the only G-10 currency to gain against the dollar overnight. GBP/USD reversed a three-day downtrend amid expectations that the Bank of England, in tomorrow’s meeting, will take an unexpectedly hawkish stance due to better than expected economic and inflation data in the UK as well as upbeat vaccination news, particularly compared to the EU.EUR
Amid a relatively wide trading range overnight, the euro is little changed. After yesterday’s upbeat ZEW Survey, today’s releases of CPI and Construction Output were close to market expectations. The ECB is expected to push back on higher bond yields.CAD
The loonie weakened slightly following release of CPI data for Canada, which came in lower than expected, and from softer oil prices.ASIA/PACIFIC
The Chinese yuan moved little overnight ahead of the Fed meeting today. The Australian dollar dropped for the third straight day in line with the stronger dollar and lower commodity prices. The Bank of Japan meets on Friday – no change to monetary policy is expected.
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