The U.S. eked out small gains against most of its European counterparts, but fell against the Japanese yen and Norwegian krone.
USD
The dollar was under pressure most of yesterday following an underwhelming retail sales print.
The dollar’s small rise overnight could be partially attributed to an interview with incoming White House economic adviser Larry Kudlow in which he would support a strong dollar. Kudlow stated, “I would buy King Dollar and I would sell gold.”
This morning’s economic docket may allow the greenback to breakout of recent ranges, though unlikely. Empire State Manufacturing impressed, rising to 22.5 in March from 13.1 in February and beating estimates of a 15.0 reading. Jobless claims remain near a four decade best and the Philly Fed index came in line with expectations.
We expect trading conditions to thin somewhat during the afternoon as the Europeans head home and many U.S. traders may be be distracted by the start of the March Madness college basketball tournament.
JPY
The Japanese yen surged stronger against most of its counterparts and adding 0.4% of strength versus the U.S. dollar. U.S. equities dropped yesterday and markets around the globe have modest risk aversion sentiment, boosting the safe-haven.
Market participants will continue to keep an eye on the ongoing political scandal in the country which puts the Abenomics policy agenda at risk.
NOK
The dollar lost nearly a full percent against the Norwegian krone before pulling back some overnight on hawkish comments from the country’s central bank. Norges Bank said an increase in borrowing costs will “soon be appropriate.” Markets are now pricing an interest rate hike after the summer of this year.
