Currencies

The pair runs another profitable week, supported by the recent ECB-Fed policy divergence, but trades with caution today as inflation figures and other data loom

The pair pauses its four week-losing streak and rebounds from the recent slump, as fears over the banking sector ease

Watch today’s US Open for insights on the recent developments in the banking sector that seem to help sentiment, fresh geopolitical tensions and more

The pair is constructive after the US Fed was constrained to a conservative stance last week due to the banking turmoil and the BoE was forced to another increase due to the reacceleration in inflationary pressures

Watch today’s US Open for discussion on the Fed’s hike and conservative stance due to the banking turmoil, as well today’s policy decision by the Bank of England

The Fed raised the policy rate by 25 bps to 4.75%-5%. However, its rhetoric is more dovish than the ECB’s, which is EURUSD supportive. The spread between the German and US 2-year notes (top chart) has charted a series of higher troughs followed by higher peaks. This denotes the relative hawkishness of the ECB over the Fed. The EURUSD is sensitive to this spread with a correlation coefficient of 84%.…

The US central bank was constrained to a 0.25% rate increase and to an unchanged 5.1% median terminal rate projection, due to the banking turmoil amidst elevated uncertainty

The Bank of England faces rising core inflation, with a recent increase to 6.2% from 5.8% in January. Service-sector inflation is a concern, with hospitality inflation proving difficult to combat. The Bank is paying close attention to inflation numbers and is likely to announce a 25bp rate hike, but will reiterate its commitment to using tools for financial stability. If broader inflation data continues to improve, the Bank may pause…

Watch today’s US Open for commentary on the takeover of Credit Suisse by UBS and how the banking turmoil has affected market expectations for the Fed’s policy decision, due on Wednesday

The pair comes under pressure today, as markets are on edge ahead of the monetary policy decision by the US Fed (Wednesday) and the Bank of England (Thursday)

The pair retreats as the accounts of the last policy decision revealed that RBA policy makers will consider pausing the hike cycle, as markets now brace for the US Fed policy update on Wednesday