Forex news for March 28, 2017:

  • March 2017 US consumer confidence 125.6 v 114.0 exp
  • Richmond Fed rises to best since 2010
  • Fed's Fischer: Two more hikes to me 'seems to be about right'
  • Fed's Yellen: No comments on monetary policy
  • January 2017 US Case Shiller 20 city HPI report 0.9% vs 0.7% exp m/m SA
  • US Feb prelim wholesale inventories +0.4% vs +0.2% expected
  • February 2017 US advance goods trade balance -64.8bn vs -66.4bn exp
  • Poloz: Downside risks identified in last MPR are still on the table
  • Poloz: Raising rates prematurely would cause a recession
  • Fed's Kaplan: Wants to gradually remove accommodation
  • SNB's Maechler: We are not in a position of even considering to shrink balance sheet
  • Maechler: Yields are low but rising and going in the right direction
  • Scots vote for Scoxit
  • BOE's McCafferty: UK will raise rates when the UK economy is strong enough
  • Germany wants an early Brexit agreement on the UK ponying up the dough
  • House majority leader: Republicans still intend to repeal and replace Obamacare

Markets:

  • S&P 500 up 20 points to 2361
  • WTI crude up 60-cents to $48.33
  • Gold down $4 to $1250
  • US 10-year yields up 3 bps to 2.41%
  • AUD leads, GBP lags

This is trading politics.

With economic data, there are peaks and valleys but it tends to follow a theme. Politics is a rollercoaster. At the New York open on Monday, healthcare reform was dead and the Republican party was falling apart. Now, Republicans are talking about working with Democrats and healthcare reform is back on the agenda.

In addition, economic data is improving. Consumer confidence and the Richmond Fed roared higher Tuesday. Oil also got a lift in what was partly a relief rally and partly a reflection of Libyan production disappointment.

EUR/USD started US trading at 1.0860 and crept 10 pips higher before it began to drop. It was a fairly quick dip overall and didn't stop until 1.0799, which was precisely Friday's closing level. In short, it's back to where we started the week and there are bigger questions about whether yesterday's gain was a false breakout.

USD/JPY looks to have formed a bottom at 110.00. It was tested for the second day but it could only get to 110.18, which was touched at the start of US trading. From there it was a march higher as stocks and yields moved up. We finished 100 pips from the lows and a half-cent higher on the day.

Wednesday is Article 50 day so the focus will be on the pound. Cable touched 1.2596 early in Europe but edged down to 1.2560 as US traders arrived and the sank to 1.2441 as dollar buying accelerated later.

The drama was mostly confined to USD, JPY, EUR and GBP. The commodity currencies have been on their own track this week and it was similar on Tuesday.

UAD/USD slowly tracked to 0.7655 from 0.7600 then peeled back 25 pips as the dollar got a bid.

USD/CAD was on the defensive. I was expecting a bit more optimism from Poloz but he's being careful not to give CAD bulls any ammunition. Instead it was a 1.3% rise in oil prices that pulled USD/CAD to 1.3360 from 1.3400.