USD: A Volatile Overnight session in FX
Apr-14 06:28
- It's another big session in FX, some wide overnight range in G10s as Market Participants continue to assess how much of a Safe Haven Currency the Dollar is, given the outlook growth Risk driven by Global Tariffs.
- DXY fell to its lowest level since May 2022 on Friday, the most Weighted EURUSD pair jumped to 1.1473, this was the best printed level for the EUR since February 2022, and just short of the 2022 high at 1.1495.
- Today the EURUS has settled back around the 1.1400 level, only printing a 1.1409 high.
- The Yen has taken over the NZD as the best early performing Currency, up 0.65%, but is still some way short of 142.25, the Overnight printed low in USDJPY.
- More interestingly, the Kiwi is clearing the April high, best level since December, next resistance comes at 0.5889, followed by the December high of 0.5927 in NZDUSD.
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FED: March Economic Projections: Higher Inflation, Weaker Growth, Same Rates
Mar-14 21:28
The MNI Markets Team’s expectations for the updated Economic Projections in the March SEP are below.
- The unemployment rate is likely to rise slightly for 2025 alongside a downgrade in GDP growth, while the 2025 core and headline PCE inflation projections are set to rise again. Changes to later years will likely be limited, however.
- More detail on the shift in Fed funds rate medians is in our meeting preview - we will add more color next week.
FED: Market Pricing Nearly 3 2025 Cuts As Conditions Tighten
Mar-14 21:25
Amid rising government policy uncertainty, sentiment among businesses and consumers has fallen sharply since the start of the year, while equities and the dollar have reversed their post-election rise. Overall, financial conditions have tightened, even if stress is not yet mounting, e.g. no major widening of credit spreads (the accompanying chart shows the Fed’s financial conditions impulse index but only through January).
- Combined with growth fears, this has affected expectations for the Fed’s rate path, with around 18bp more cuts expected in 2025 compared with what was seen after the January FOMC. 65bp of cuts are priced for the year as a whole. 2025 cut pricing reached 71bp before the February inflation data and 76bp before the February payrolls report.
- A rate cut is seen with near zero probability for March’s meeting, but the first full cut is just about priced for June, with a second nearly priced by September.
- Chair Powell has no reason to endorse or refute these expectations – he’s likely to be happy with a press conference that ends with little discernable change in pricing.
CANADA'S CARNEY ANNOUNCES ELIMINATION OF THE CONSUMER CARBON TAX
Mar-14 21:17
- CANADA'S CARNEY ANNOUNCES ELIMINATION OF THE CONSUMER CARBON TAX
