Global Themes

The dollar wore a thin layer of green on St. Patrick’s Day, though the U.S. unit was still on track to log the week in the red. The U.S. currency slipped to five-week lows as a big week didn’t go its way. Dollar positions were on the overcrowded side ahead of central bank meetings in the U.S. and Britain, and Europe’s first big vote of the year in the Netherlands. Markets took to unwinding long dollar positions after the Fed delivered a widely anticipated rate hike but didn’t deviate for its go-slow path for future rate rises. The Dutch voted against electing a far-right candidate while one U.K. central banker voted for an inflation-fighting interest rate hike. The dollar today will take its cues from comments from the sidelines of a G20 meeting in Germany and U.S. data on consumer optimism.

USD

The dollar steadied after falling into its biggest hole in five weeks. Dollar bulls found a catalyst to pull some chips off the table after the Fed raised rates as widely expected but sketch a slow pace of coming rate rises. The Fed meets six more times this year and expects to raise rates at two of those meetings. Europe openly contemplating raising rates also dulled some of the dollar’s sheen. America’s fluid rate debate could take direction today from U.S. data on industrial production, leading indicators and consumer sentiment.

EUR

A case of political jitters pulled the euro off a five-week high against the dollar. The euro was still on pace for a weekly win after the Dutch rejected a populist leader who had designs of removing the Netherlands from the European Union. Nascent talk of euro zone lending rates rising also buoyant the euro and neutralized some of the dollar’s bullishness. Still, the Dutch vote didn’t erase the risk of a far-right leader winning France’s presidential vote. To be sure, polls today indicated growing support for anti-EU candidate Marine Le Pen.

GBP

Sterling steadied Friday and was well on track for a weekly gain, having ended the previous week below 1.22. The pound received a central bank-inspired lift after the Fed stuck to its go-slow approach to raising interest rates, while a member of the Bank of England unexpectedly cast a vote for an inflation-fighting rate increase. Meanwhile, minutes from this week’s BOE meeting suggested more officials could coalesce around a rate hike should the U.K. economy keep on a resilient trajectory. Still, sentiment hasn’t meaningfully brightened for the pound with the Brexit divorce right around the bend.

CAD

Canada’s buck pared some of its weekly winnings on Friday, with the northern dollar benefiting from the greenback’s down week. The loonie climbed to March highs this week after the Fed stuck to a path of slow interest rate hikes which neutralized bullishness for the big dollar. A high level view of USDCAD shows it above 1.3250, its average rate so far in 2017. The greenback should maintain the upper hand against the loonie as long as oil keeps below $50.

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