23rd March 2021 - Dollar bulls take a breath



Good Morning,


Market Headlines

Risk aversion took over financial markets after Turkish President Erdogan decided to fire the governor of the Central Bank of the Republic of Turkey, resulting in the local currency plummeting against the greenback, which in turn appreciated against most major rivals. The dismal market mood eased as the day went by, with Wall Street managing to close the day with gains.US Treasury yields retreated from their multi-month highs, adding pressure on the American currency. Nevertheless, major pairs held within familiar levels amid the absence of relevant news. Commodities, Brent crude oil futures rose 0.1% to $64.60, copper rose 0.6%, iron ore fell 2.4% to $156.10, and gold fell 0.3%.


Overnight Currency Ranges

AUD/USD 0.7689 0.77555

EUR/USD 1.1870 1.1947

GBP/USD 1.3819 1.3977

USD/JPY 108.50 108.95

NZD/USD 0.7136 0.7181

USD/CAD 1.2474 1.2541

USD/CNH 6.502 6.5185

AUD/JPY 83.45 84.30

AUD/NZD 1.0780 1.0805


AUD Thoughts

Another quiet day on the domestic data calendar before attention shifts to the data events in the UK &US.


January ILO unemployment rate is expected to edge up to 5.2%. The extended furlough scheme will continue to hold down job losses until its conclusion in the second half of the year. In the US, Federal Reserve Chairman Powell will present a testimony to Congress this evening following remarks on the BIS panel. Should he touch on the policy outlook, Chair Powell is likely to echo the dovish approach he has repeated in recent weeks, most recently at the March FOMC meeting press conference. Vice Chair Clarida will speak on Thursday and is likely to echo the tone of Powell’s remarks.


AUD/USD was sold aggressively in the early hours of yesterday’s Asian session before a late recovery to finish the session unchanged at 0.7750. Demand is now expected to grow ahead of the recent low of 0.7689 while offering interest ahead of 0.7850/60 should prove difficult to breach this week.


Event Risk Data Today

NZ: The government will announce details of its housing plan at 9am today.


UK: The January ILO unemployment rate is expected to edge up to 5.2%. The extended furlough scheme will continue to hold down job losses until its conclusion in the second half of the year.


US: February new home sales are expected to retrace 5.2% after a 4.3% rise in January. Low rates and the search for space continue to drive demand. Like many recent manufacturing surveys, the March Richmond Fed index should be supported by rising input costs and new orders (market f/c: 15.0). Fed Chair Powell and Treasury Secretary Yellen will deliver the first of two testimonies, beginning with the House Financial Services Committee. The discussion will be focused on the CARES Act, but the latest stimulus package may also be covered. The FOMC’s Bowman (10:15 AEDT), Bullard (00:00), Bostic (01:10), Barkin (02:00), Brainard (04:30 and 06:45), and Williams (05:45) will be speaking.

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