USD: Narrowly mixed – BBH

The US dollar is narrowly mixed in mostly uneventful turnover in the foreign exchange market, notes the analysis team at BBH.

Key Quotes

“There is a palpable sense of anticipation.  Anticipation for the ECB meeting on Thursday, which is expected to see a six or nine-month extension of asset purchases at a pace half of the current 60 bln a month.  Anticipation of the new Fed Chair, which President Trump says will be announced: "very, very soon."  Anticipation of US tax reform proposal that will be released as soon as the budget is approved.  Anticipation of US corporate earnings, with FANG, shares off for the fifth session yesterday, the longest downdraft of the year.”  

“The 10-year US yield is sitting just below the 2.40% level, which marks the upper end of the six-month trading range.  It has finished the North American session once above there since the end of Q1.  This has helped put a floor under the dollar against the yen.  When the yield faltered at the cap yesterday, the dollar pulled back to JPY113.25 and recovered in the afternoon session in Tokyo and through the European morning to return to the JPY113.75 area.     There is nearly a $1 bln option struck at JPY113.50 that expires today and a nearly $720 mln strike at JPY114.00 the will be cut.”