In the News

Dollar Retreats, Krone Rallies With Crude Prices: Inside G-10

(Bloomberg) -- The greenback fell Tuesday amid monthly hedging flows and after a report of a slight uptick in US job openings in February, halving gains seen Monday following upbeat ISM data. The Norwegian krone led currency gainers, booted by higher oil prices, while the Swiss franc fell.


  • The Bloomberg Dollar Spot Index slid ~0.1% after failing to eclipse the 1250 level and 1251.21 YTD; index rose 0.3% Monday
    • Chances of a Federal Reserve cut in June stand at 56%; the yield on policy-sensitive 2-year Treasury notes is down one basis points to 4.69% while 10-year Treasury yields rise six basis points to 4.37%
    • The number of US available positions edged up to 8.76 million in February
    • Focus turns to data, Fed speakers including Chair Jerome Powell Wednesday and US jobs number Friday
    • “A healthy economy, and inflation still isn’t running crazy hot, so I believe the Fed will stick with their projections of 3 cuts this year,” says Helen Given, a foreign-exchange trader at Monex; adds that recent pricing less than that is “a touch overzealous” and that “people may be bracing for somewhat of an underperformance for non-farm payrolls on Friday.”
  • EUR/USD rises 0.2% to 1.0769, after falling to its lowest level since Feb. 15 earlier in the session
    • German inflation eased for a third month in March, supporting expectations that the European Central Bank will start lowering interest rates in June
    • Stops seen above 1.0780 with stop entries below 1.0680, a Europe-based trader says
    • One-week risk reversals trade at 37 basis points, puts over calls, as dollar bullish structures are in vogue into the ECB meeting on April 11
    • EUR/JPY one-week risks rallied to 207 basis points in favor of the Japanese currency for the first time since Dec. 19
  • USD/CHF rallies as much as 0.5% to 0.9091 following a bout of interbank buying, a five-month high; Switzerland’s manufacturing PMI to 45.2 (estimate 45.0) in March from 44 in February
  • USD/JPY falls 0.1% to 151.52; investors are considering whether the macro backdrop is now strong enough for spot to breach 152 and possibly force the hand of Japanese authorities, according to Asia-based FX traders
    • The pair trades slightly lower at 151.61; DTCC data show that 153 strike is in focus since the BOJ’s latest meeting
    • Risk reversal widen in favor of yen calls as US share prices retreat
  • GBP/USD rises 0.2% to 1.2575 with gains slowed by interbank EUR/GBP buying
    • UK house prices fell for the first time in three months, suggesting the market may be stagnating due to high mortgage rates and strained affordability.
  • USD/CAD is little changed at 1.3573; gains are seen slowed by a number of 1.36 options rolling off later this week
    • “The BoC and the RBNZ (& BoJ; see below) are the other G10 central banks meeting this month. The BoC will be in a similar position in terms of guidance ahead of the June meeting although expectations of a BoC rate cut in June are not as high as for the ECB,” write Derek Halpenny and Lee Hardman at MUFG in the monthly research report
  • AUD/USD rises 0.4% to 0.6513 amid offshore yuan gains and higher commodity prices
  • Some information comes from FX traders familiar with the transactions who asked not to be identified because they aren’t authorized to speak publicly
Reporting by Vassilis Karamanis and Robert Fullem With assistance from Anya Andrianova.

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