Talking Points:
- US Dollar Soars on Fed Rate Outlook, Aussie and NZ Dollars Underperform
- British Pound Might Find Support as BOE’s Carney Drives Tightening Bets
The US Dollar resumed pushing higher in overnight trade, adding as much as 0.4 percent on average against its leading counterparts. Firming interest rate hike expectations appeared to be behind the move. Fed Funds futures rose to hint the FOMC may deliver as many as two increases in the target range for the baseline lending rate by year-end. The Australian and New Zealand bore the brunt of the greenback’s advance, sinking as much as 0.9 and 1.1 percent respectively.
The economic calendar is relatively quiet in European trading hours. EU finance ministers are scheduled to hold a meeting in Brussels, with Greek funding issues likely to loom large once again. The emergence of anything concrete beyond yesterday’s inconclusive Eurogroup sit-down seems unlikely. Athens is due to begin negations with the so-called “institutions” (EU, ECB, IMF) on Wednesday and a breakthrough before then is probably too much to hope for.
Later in the day, Bank of England Governor Mark Carney is due to testify before the House of Lords’ economic affairs committee. If the outing follows the template set by Mr Carney’s recent Parliamentary appearances explaining February’s quarterly Inflation Report, a mildly hawkish tone is to be expected. That could help rekindle BOE rate hike speculation, offering a lift to the British Pound.
