Sterling is so far the strongest currency this week after being propelled by yesterday's employment data. Markets are in consolidative mode elsewhere. The USD is the second strongest currency but is held below last week's high. The Japanese yen is mixed as the strong rebound in stock markets this week triggered recoveries in Yen crosses but momentum is so far unconvincing. Commodity currencies are also mixed with Canadian dollar holding on to mild gain while Kiwi is under heavy pressure. The economic calendar isn't too busy today and main feature is Canadian inflation, which could trigger some volatility in pre-holiday thin markets.
In US, Fed chair Yellen said yesterday that “the larger the shortfall of employment or inflation from their respective objectives, and the slower the projected progress toward those objectives, the longer the current target range for the federal funds rate is likely to be maintained.” Regarding the current recovery she noted it's "remained far from maximum employment." And in Fed's baseline outlook, the short fall of full employment takes more than two years to close.
Yesterday, the BOC left the policy rate unchanged at 1%. Policymakers also indicated that they expected core inflation would remain well below 2% this year while persisting economic slack and heightened retail competition would keep the rate below 2% until early in 2016. The central bank indicated that despite gradual strengthening in the fundamental drivers of growth and inflation, the downside risks to inflation and the risks associated with household imbalances remained elevated. On the monetary stance, the BOC maintained its neutral policy stance, indicating that 'the timing and direction of the next change to the policy rate will depend on how new information influences the balance of risks'.
On the data front, Australia NAB business confidence dropped to 6 in Q1. Japan consumer confidence dropped to 37.5 in March. German PPI and Eurozone current account will be released in European session. In US session, Canada CPI is the main focus while US will release Philly Fed survey and jobless claims.