Dollar retreated yesterday on profit taking after the dollar index hit 100 psychological level. Such move was then followed by strong rebound in equities. Dow Jones 30 closed 259.83 pts, or 1.47% higher at 17895.22 while S&P 500 closed up 25.71 pts, or 1.26% at 2065.95. These two developments suggested that traders could be getting cautious ahead of the weekend, and more importantly, ahead of next week's FOMC meeting. There were speculations that Fed would drop the word "patient" from the FOMC statement and pave the way for summer rate hike. However, it's still highly uncertain whether the hike would happen in June or September, and what the follow pace of tightening would be. And next week's statement could provide some clues and thus trigger volatility in the markets. As for today, dollar index would probably stay in range below 100 handle.
The major focus today would be on Canadian job data. Economists expected -5k contraction in the employment market in February while unemployment rate is expected to rise to 6.7%. USD? CAD breached 1.2797 resistance this week but quickly retreated. Current development argues that the consolidation from 1.2797, which started back in January, might extend with another falling leg. And, stronger than expected job data from Canada, with pull back in dollar as background, could trigger a dip in USD/CAD.
Elsewhere, New Zealand business performance manufacturing index rose to 55.9 in February. Japan industrial production rose 3.7% mom in January. US will release PPI and U of Michigan confidence today.