The U.S. dollar is on its back foot to start the day as global risk sentiment has improved.
Overview
The Dollar Index is 0.3% lower. Much of the upbeat trading is a result of the possibility of a ceasefire between Russia and Ukraine. It is hard to have a positive outlook considering the recent past. However, Bloomberg points out that global equities are about 8% higher than the recent lows during the early days of the invasion.The economic docket remains light today. The March Conference Board consumer confidence print and February’s JOLTS job openings are due out at 10 a.m. There are also two Fed speakers on today’s dockets. Future interest rate expectations have been stable over the past few days. Traders are still fully pricing in a 100% chance of a 25 bp rate hike in May and a 79% chance of a 50-basis point hike. Market participants and the Federal Reserve will continue to keep an eye on bond markets. The yield on the 10-year and the 2-year are close to being “inverted” which is widely seen as a recession indicator.
What to Watch Today…
- JOLTS Job Openings at 10 a.m.
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EUR
The Euro is popping higher and the U.S. dollar is falling in early trading. There is not much in the way of European news to justify the move. Instead, traders are focusing n positive headlines about a possible ceasefire between Russia and Ukraine. A number of headlines show that Russia is said to be set to cut military activity near Kyiv.
It has yet to be seen whether the move is simply a knee-jerk reaction to the beginning of a longer, more sustained recovery for the common currency.
JPY
The Japanese yen has taken a pause from its recent decline overnight. However, the beleaguered currency is on track to have its worst month in seven years. The yen has fallen nearly 8% over the last thirty days, pushed down by increased interest rate differential between the Bank of Japan and its rivals.
The Bank of Japan has intervened to keep bond yields at an upper limit of 0.25% and has remained committed to keeping monetary policy loose to help the slumping economy. Some analysts expect the yen to continue to tumble past its current 7-year lows as the policy continues to diverge.
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