With the FOMC minutes firmly in our sights, we will be looking for guidance from the Fed on when they intend to raise interest rates. The dollar continues to remain firm across many of the major pairs, but as investors take on more risk appetite we are also seeing weakness against the more exotic currencies. Euro took another leg lower after extending yesterday’s move, but failed to break below 1.05 against the greenback. The pound remains under pressure despite GDP growth figures showing that the UK economy continued to expand in the last quarter of 2016.
Meanwhile, the drama continues to swirl in the French elections. After investigators raided the offices of far-right candidate Marie Le Pen earlier this week, two of her aides have been taken into custody. The investigation stems from suspicions that the two staffers were paid with funds from the European Parliament without actually being employed there, tying into the larger scandal that her party defrauded parliament for some €340,000 euros.
Retail sales in Canada surprised to the downside this morning, but the reaction was muted for the Canadian dollar. It was the first fall in five months, led by a 0.9% decline in auto sales.
Yesterday, the Mexican government announced a new intervention measure from their central bank. According to the FX commission, heightened peso volatility since the election does not match up with the economic fundamentals, so they will be implementing a new hedging program that will help them control their currency without draining reserves.
Basically you can expect a far more stable, even stronger peso now that the Mexican government has given themselves a tool to control volatility without running out of cash in the process.
EURUSD: After failing to break below 1.05, euro has recovered from overnight lows.
GBPUSD: Sterling remains under pressure despite GDP growth figures showing that the economy expanded in Q4.
AUDUSD: Aussie dollar is flat after overnight gains were wiped out as the housing market in China cools.
JPYUSD: Yen stronger this morning as investors look ahead to the Fed minutes.