Today is the President’s Day holiday in the United States. US stock and bond markets are closed. Canadian markets will also be closed for Family Day. Trading during NY time is expected to be thin.
Also, the economic indicators that will be announced later today are not attracting much attention. Swedish Consumer Price Index (January), Turkish Consumer Confidence Index (February), Eurozone Construction Industry Output (December), Eurozone Consumer Confidence/Preliminary Report (February), etc. There are no plans to announce major economic indicators such as the United Kingdom, the United States, and Canada.
A series of strong US economic indicators last week led to rising US bond yields and upward pressure on the dollar. The market has not led to speculation that the pace of interest rate hikes will accelerate. According to the latest CME FedWatch, rate hikes at the March FOMC meeting are expected to be around 85% for 25bp and around 15% for 50bp. However, there is a growing view in the market that interest rate hikes will continue for a longer period and that the terminal rate level will exceed 5%.
As mentioned above, it will be difficult to find a clue today. Recently, the dollar’s strength is showing signs of adjustment, and trading is likely to be mixed in overseas markets after this as well. At the end of last week, the dollar exchange rate reacted sensitively to Takahato’s remarks by US financial officials. However, it is difficult to come up with a decisive blow, and there seems to be no noticeable change in last week’s strong dollar.
Today, we do not expect the USD to move, so we will not touch it.
With New Zealand set to hike interest rates this week, we have just sold the AUDNZD in anticipation of some buybacks out of caution.