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The FED Monetary Policy Decision and Projections Puts the Dollar in the Spotlight

Earlier in the Day:

It’s was a relatively busy start to the day on the economic calendar this morning. The Kiwi Dollar and the Japanese Yen were in focus early on.

For the Kiwi Dollar

Current account figures were in focus.

In the 4th quarter, New Zealand’s current account deficit narrowed from NZ$3.52bn to NZ$2.70bn, quarter-on-quarter. Economists had forecast a narrowing to NZ$2.88bn.

Year-on-year, the deficit remained unchanged at NZ$2.55bn. Economists had forecast a widening to NZ$2.59bn.

The Kiwi Dollar moved from $0.71891 to $0.71896 upon release of the figures and minutes. At the time of writing, the Kiwi Dollar was down by 0.14% to $0.7178.

For the Japanese Yen

Trade figures were in focus this morning.

In February, Japan’s trade balance rose from a ¥325.4bn deficit to a ¥217.38bn surplus. Economists had forecast surplus of ¥420.0bn.

According to figures released by the  Ministry of Finance,

  • Exports fell by 4.5%, when compared with February 2020, while imports jumped by 11.8%.
  • The trade surplus narrowed from a February 2020 ¥1,113.04bn to ¥217.38bn in February 2021.
  • Exports to China rose by 3.4%, while imports from China surged by 114.5%.
  • To Europe, exports fell by 7.3%, with exports to Germany and the UK falling by 4.0% and by 29.3% respectively.
  • To the U.S, exports slumped by 14.0%, with imports from the U.S falling by 3.7%.

The Japanese Yen moved from ¥109.054 to ¥109.017 upon release of the figures. At the time of writing, the Japanese Yen was down by 0.12% to ¥109.13 against the U.S Dollar.

Elsewhere

At the time of writing, the Aussie Dollar was down by 0.23% to $0.7728.

The Day Ahead:

For the EUR

It’s a relatively quiet day on the economic calendar. Finalized February inflation figures for the Eurozone are due out later today.

Expect any revisions to prelim figures to influence.

Away from the economic calendar, COVID-19 news will also be in focus ahead of the FOMC decision and projections late in the day.

At the time of writing, the EUR was down by 0.07% to $1.1895.

For the Pound

It’s yet also another particularly quiet day ahead on the economic calendar. There are no material stats to provide the Pound with direction.

With no stats to consider, the Pound will also be in the hands of market risk sentiment on the day.

At the time of writing, the Pound was down by 0.06% to $1.3882.

Across the Pond

It’s a relatively busy day ahead on the economic calendar. On the economic data front, house price figures for February are due out later today.

Housing starts and building permit figures are unlikely to have too much influence, however.

The markets will be looking ahead to the FOMC monetary policy decision and, more importantly, the FOMC projections.

FED Chair Powell has attempted to calm market fears of a shift in policy as a result of reinflation. The projections and forward guidance will therefore be key.

At the time of writing, the Dollar Spot Index was up by 0.07% to 91.925.

For the Loonie

It’s a relatively busy day on the economic calendar. Inflation figures for February are due out.

Expect Loonie sensitivity to the numbers.

Crude oil inventory numbers will also influence.

At the time of writing, the Loonie was down by 0.07% to C$1.2457 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.