The United States Dollar returned to familiar mixed ranges this morning as interest rate volatility dropped off and “soft landing” hopes re-emerged to wrap up the first quarter of 2023.
Though it’s clear that the biggest banking scare since the 2008 financial crisis will continue to reverberate through the global economy for months, the damage appears to be contained for now, and central banks can shift their focus back to rampant inflation that continues to beleaguer most nations. The Federal Reserve’s internal watchdog and the vice chair have both launched separate investigations into the failure of Silicon Valley Bank in the hope that the monetary policy body may be able to prevent such a thing from happening again.This morning, mortgage applications in the US rose 2.9%, showing a surprising resilience despite last week’s 25 basis point hike from the Fed. Due out tomorrow is a quarterly GDP reading from the US, and Friday will be the Fed’s preferred inflation data point, the Person Consumption Expenditure reading. While currency speculation flows decrease as businesses wrap up the first quarter of this year, data will drive price action over the next few days.
What to Watch Today…
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The Japanese Yen posted a loss against the greenback of over a percent overnight and into the morning as improving risk sentiment globally weakened traditional haven currencies. Japan’s fiscal year ends this coming Friday, limiting speculative trading and pushing real-money flows. New Deputy Governor Shinichi Uchida of the Bank of Japan also spoke yesterday and indicated the central bank may make some “surprise” adjustments to its yield curve control program, putting market players on high alert and increasing uncertainty around the Yen.
The Loonie strengthened for a third straight day, approaching its March high, amid oil price advances. Even as the Buck advances against some of the G10 board, commodity currencies generally are continuing to show strength on global demand. WTI crude oil futures climbed as much as 1.2% this morning and over 5% on the week, driving demand for CAD.