USD: Last month’s retail sales release was the strongest positive surprise since August of last year, with the dollar rising 0.2% in the subsequent 30 minutes. The market expects both headline and underlying sales to be flat in March, but remember the recent tendency for the dollar to rally on firmer than expected data as the debate about when the Fed is going to start standing back from its QE strategy.
EUR: Note that Eurozone finance ministers are meeting today to finalise the bailout for Cyprus, so some comments could be heard around the event. Update:Â European agenda has possible problems on multiple fronts
More: Â EURUSD Is Testing 1.3100 Resistance From Where Price Could Retrace To 1.2900/50
Idea of the Day
There is a sense that FX markets are having a breather after some fairly major moves so far this week. The Aussie continues to be on fire (just below year high of 1.0599) and the euro has also performed relatively, benefitting from the weakness in the yen. Meanwhile the yen itself has paused just shy of the 100 level on USDJPY.
For now at least, there is not the feeling that this is going to be a Friday when these key levels are going to be tested. That said, what this year has shown so far is that currencies are trading a lot more independently and far less correlated with other asset markets. On this basis, the path for more yen weakness looks in place, with the latest reports suggesting the BoJ is set to raise its inflation forecast for next year, determined to show that they at least believe their policies will work.
Latest FX News
AUD: Benefitting during the early part of Thursday from the on-going positive sentiment, not far short of the year’s high at 1.0599. Australian PM Gillard saying overnight that her fiscal stance leaves room for the RBA to cut rates, which took the wind out of the Aussie’s sails during the Asia session.
JPY:  Not quite showing the stomach to push through the 100 level on USDJPY both through Thursday and the Asia session today. Latest comments suggest that the BoJ is looking to raise its inflation outlook for the next fiscal year, Bloomberg sources suggesting 1.5% for 2014.
EUR: Against the dollar, pushing 1-month highs yesterday, but struggling to sustain moves above the 1.31 level. The continued developments in Cyprus have so far not had a further negative impact, but the latest headlines suggest more money will have to be found from somewhere.
