Mixed BoE comments.
The JOLTS data recorded a decline in job openings to 9.9mn for February and well below consensus forecasts of 10.40mn while the January figure was revised down to 10.56mn from the original reading of 10.82mn. The decline in job openings triggered fresh speculation of a significant easing in labour market conditions.
Treasuries posted renewed gains after the JOLTS data with the 10-year yield dipping below 3.40% while the 2-year yield traded around 3.86%.
There was another shift in Fed Funds rate expectations with no change at the May meeting seen as slightly more likely than a further rate hike.
The dollar had managed to regain some ground into the New York open, but the JOLTS data triggered another round of significant selling pressure. The dollar index dipped to 2-month lows.
There was strong demand for gold during Tuesday with a significant break above the $2,000 level to 12-month highs.
Bank of England chief economist Pill stated that there was still a lot of tightening in the pipeline given the policy lags. He also expects headline inflation to fall significantly but warned over the risk of persistence of domestically-generated inflation. The May rate decision would be dependent on the forecast analysis and data flow.
MPC member Tenreyo stated that a looser monetary policy stance is needed to meet the inflation target. With current rates, there would be a significant inflation undershoot
The Reserve Bank of New Zealand increased interest rates by 50 basis points to 5.25% and above expectations of a 25 basis-point hike.
The US will release important data on Wednesday with the ADP jobs data and ISM non-manufacturing index. Consensus forecasts are for an increase in US private payrolls of close to 200,000 from 242,000 previously with a limited slowdown in the ISM index to 55.0 from 56.3.
The Euro posted further gains after Tuesday’s European open with EUR/USD challenging above 1.0900. The dollar secured some respite in early New York, but then lost ground again after the US data. EUR/USD surged again after the US data with a move to 2-month highs above 1.0950.
Lower yields boosted the yen with weaker US equities also underpinning the Japanese currency. From just above 133.00, USD/JPY dipped sharply to lows below 131.50 before a tentative recovery to 131.70.
The Swiss franc was dominated by global elements with a firm underlying tone as gold posted strong gains. EUR/CHF retreated to 0.9925 while USD/CHF dipped sharply to 19-month lows near 0.9050.
Sterling posted net gains with demand on seasonal grounds. GBP/USD posted 9-month highs at 1.2525 before a limited correction to near 1.2480.
The Australian dollar was unable to make headway after the Reserve Bank of Australia held interest rates steady. AUD/USD drifted below 0.6750 despite a weaker US dollar and held around this level on Tuesday. USD/CAD found support above 1.3400 and rallied to 1.3450. The New Zealand dollar strengthened after the RBNZ policy decision with net NZD/USD gains to 0.6350.
|ADP Non-Farm Employment Change
|ISM Services PMI