Currency markets were quiet again overnight with only limited volatility for the British sterling and Australian dollars.
Indeed, the Bloomberg Dollar Index is up only 0.2%. EUR/USD is mostly unchanged but remains near a 3-week high.
Yesterday was a slow news day allowing dovish comments from Chicago Fed President Charles Evans to creep to the top of the headlines. Evans said the Fed could keep rates where they are until late 2020. He also offered a hypothetical situation in which inflation would fall to 1.5% and the Fed would be forced to cut interest rates.
The economic docket is fairly light with only industrial production due out at 9:15 a.m., so traders will turn to more monetary policy speeches to dictate today’s trade. New York City will welcome the European Central Bank’s Governing Council member Ewald Nowotny this morning. Dallas Fed President Robert Kaplan will be speaking this afternoon in New Mexico.
What to Watch Today…
- Industrial Production at 9:15 a.m.
Complete Economic Calendar can be found here.
The Australian dollar whiplashed overnight. The Australian dollar dropped nearly half a percent within an hour after minutes of the last Reserve Bank of Australia meeting confirmed their recent dovish shift. The minutes showed that policy makers had extended conversations about possible rate cuts. However, the Australian dollar has since recovered most of its losses. Perhaps, traders realized that the central bank concluded that there was no “strong case” for a cut in the near term.
The British pound is under pressure this morning even after a report showed the labor market remains fairly healthy. Total employment rose 179K in February, essentially in line with estimates of 181K. Average weekly earnings also increased 3.5%, outpacing inflation in February. The unemployment rate held at 3.9%.