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Greenback Firmly Off The Lows In Late Session Trade

  • While the USD index remains around 0.20% lower on Tuesday, reflective of the lower US yields, the greenback is now well off session lows as we approach the APAC crossover. The greenback bid over the past few hours coincides closely with the weakness for equities with e-mini S&P briefly extending losses to 1.1% on the day.
  • Major pairs have seen roughly a 30-pip adjustment which sees USDJPY claw back to the 150.00 mark and EURUSD edge back towards 1.0800. NZDUSD remains the outperformer on the day, still up 0.31%.
  • Overall, today’s price action extends NZDUSD's short-term bounce, tipping the pair to print higher highs and higher lows for a fifth consecutive session. Spot briefly rose to a one-month high and notably above first key resistance at the 50-dma of 0.6183. This extends the recovery off the February lows to over 150 pips.
  • Elsewhere, the Canadian dollar holds notably weaker following the lower-than-expected CPI - USD/CAD briefly showing to a new daily high of 1.3530 in the aftermath of the data but remaining short of Thursday pre-PPI highs at 1.3552.
  • While the CPI was softer than expected on the headline (as well as the core metrics) there are a couple of one-offs here that may suggest this pace of disinflation will not be maintained. This potentially leaves CAD more subject to global sentiment shifts, rather than BoC policy ruminations - as flagged by a number of sell-side desks this week.
  • Australian Wage Price Index data will cross first on Wednesday before the UK’s public sector net borrowing figures for January. Focus will then turn to the release of the FOMC minutes before European flash PMIs on Thursday.

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