Dollar's rebound extends further in Asian session today. Momentum is starting to looking promising. But technically, there is still no confirmation of reversal yet. At the time of writing, EUR/USD is held well above 1.2205 key near term support. USD/JPY stays below 108.27 near term resistance. The greenback will look further to FOMC minutes to be released later today. Elsewhere in the currency markets, Euro and Sterling are following Dollar as the strongest ones for today. Aussie and Yen are broadly lower.
FOMC minutes to turn more hawkish
It's generally believed that minutes of the January 30-31 FOMC minutes would show a hawkish twist in the languages The questions is just on the extent. Recent solid data, including job and inflation, are solidifying the case for three rate hikes this year. And markets would now wand to see if more board members are starting to considering four hikes. That would also be tied to policymakers' view on the impact of the tax reform. In addition, markets will look at whether Fed officials are getting more comfortable with the inflation outlook.
Dollar has so far received no support from surging treasury yields, Fed hike expectation, nor the tax reform this year. There is doubt on whether the FOMC minutes could give the greenback sustainable strength. We'll keep an eye on it.
IMF endorses Australia's tax reform
The International Monetary Fund endorsed Australia's move to lower corporate taxes. Thomas Helbling, Division Chief in the IMF's Asia and Pacific Department, said that "for a country like Australia looking at the international standing of corporate tax rates is important and we would endorse that." And according to IMF's annual assessment, broader tax reform could boost GDP growth by as much as 1.3%, through lowering corporate and personal income tax, while increasing GST and introduce a land tax. According to the Treasury, its target to lower corporate tax to 25% could boost growth by 1% when fully implemented in a decade.
Release from Australia, wage price index rose 0.6% qoq in Q4. Construction work down dropped -19.4%.
Japan PMI: Yen appreciation dragged export growth
Japan PMI manufacturing dropped to 54.0 in February, down from 54.8 and missed expectation of 55.2. In particular, new export orders index dropped notably from 57.4 to 54.0, hitting the lowest level in three months. Markit noted in the release that "recent yen appreciation has coincided with slower new export order growth." Also, "a number of panelists indicated that the stronger currency had prompted them to lower prices to overseas customers." And, "further yen strengthening will create unwanted drag on inflationary pressures".
Also from Japan, all industry activity index rose 0.5% mom in December.
Looking ahead
Eurozone PMIs and UK employment data are the main focuses in European session. US will release PMIs, existing home sales and FOMC minutes later in the day.