Dollar Flat; Geopolitical Tensions Rise

 

USD

There is plenty of news breaking this week, but most of it is only slightly related to currency movements. However, a number of events are having an effect on overall risk sentiment. Geopolitical tensions are running hot. Secretary of State Rex Tillerson called on Russia to abandon its support of Syrian President Bashar al-Assad while also angering many European foreign ministers after asking why U.S. tax payers should care about Ukraine. On the other side of the globe, the U.S. is positioning a U.S. carrier group off of the Korean peninsula. As a result, oil prices have continued to rally for a seventh day.

There was no major economic data released yesterday in the U.S. and the docket remains quiet today. However, the Bank of Canada will release their interest rate decision at 10 a.m. Eastern, but the central bank is expected to keep rates unchanged.

With quiet market conditions, attention may shift to Fox Business Network’s afternoon interview of Donald Trump. Expect the president to be questioned over fiscal policy, pending tax reforms and escalations in Korea and Syria.

 

JPY

The Japanese yen continues to be the beneficiary of global unrest. The safe-haven pushed to its strongest level in a month against the U.S. dollar, before retracing in early trading. The Yen’s rise is most easily seen against the Euro, where the yen gained for 11 straight days versus the common currency. With light trading conditions, risk-off JPY yen moves could be exacerbated.

 

GBP 

The British pound ticked modestly higher this morning following decent data. The unemployment rate held steady at 4.7% in the three months through February. Average earnings gained 2.3% in February, from an upwardly revised print in January. The sterling was unable to hold onto yesterday’s early gains as higher inflation is having a negative effect on real household spending.