Forex Today – Asian Session: Unexpected Consolidation, DXY Falls as Risk Sentiment Improves

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Here’s what you need to know on Friday, March 17:

The stock market stole volatility on Thursday. Wall Street indices opened in the red to end in the green with a gain of more than 1%. The Nasdaq led with a 2.48% recovery. Systemic risk fears eased, favoring market sentiment. Contributing to the improvement, 11 of the largest US banks announced a $30 billion deposit at First Republic Bank. First Republic stocks reversed a 36% drop to close the day up 10%.

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Turning to US data, the Federal Reserve Bank of Philadelphia’s general manufacturing activity index improved in March to -23.2 from -24.3 in February, a worse reading than the -14.5 market consensus; initial jobless claims fell after rising last week; Home construction starts unexpectedly rebounded to 1.45 million, significantly above the market consensus of 1.31 million.

As expected, the Central Bank European raised interest rates by 50 basis points. The words of Lagarde’s and monetary policy statement were chosen carefully. In the first sentence, the ECB acknowledged that inflation is expected to stay too high for too long. At the same time, they are “watching” recent developments. The reaction in the foreign exchange market was limited. He euro fell modestly after the ECB meeting.

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The latest consumer inflation data for the euro zone will be published on Friday, which should not hold any surprises. Also on the agenda are US Industrial Production and the University of Michigan report on consumer sentiment.

The American session was quiet in the currency market, despite what happened on Wall Street. Most of the major currencies moved in small ranges. The EUR/USD pair consolidated around 1.0600, while the GBP/USD held firm above 1.2100.

Rising government bond yields and risk pushed USD/JPY above 133.00, and the Japanese yen rallied.

The NZD/USD pair bottomed at 0.6131 after New Zealand reported weaker than expected fourth quarter GDP figures; then bounced towards 0.6200. By contrast, Australian jobs data boosted the Aussie, sending to AUD/USD at 0.6650.

He Gold tested recent highs but pulled back as yields moved higher; the XAU/USD it remains firm at around $1,920/oz. Improved market sentiment modestly helped crude oil prices; WTI rose 1% to settle above $68.00.

Source: Fx Street

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