Dollar dipped overnight of a batch of weaker than expected economic data, including job and housing, and stays soft in Asian session today. Recent development suggested that Fed is unlikely to raise interest from near zero in June. Atlanta Fed president Dennis Lockhart said that a June rate hike wasn't "off the table" but that's "not my preference. He referred to the data of Q1 and said they have been "notably weak". And that gave rise to "heightened uncertainty about the track the economy is on." preferred "waiting a while longer improves the chances of seeing confirmation from incoming data that the economy is on the desired path."
Boston Fed president Eric Rosengren echoed and said Fed wasn't ready for a rate hike yet. He noted jobs were "disappointing" in March and inflation stayed "stubbornly below" the 2% target. He warned that "it remains difficult to separate the temporary and easy-to-explain from the lasting and more concerning". Thus, "incoming data would need to improve to fully satisfy the committee’s two conditions for starting to raise rates."
In Europe, S&P downgraded Greece's long and short-term sovereign credit ratings to CCC+/C from B-/B. It also removed Greece's ratings from CreditWatch, where it had placed them with negative implications. The agency warned that 'without deep economic reform or further relief, we expect Greece's debt and other financial commitments will be unsustainable". Indeed, yield spreads between Greece and bund have widened amidst rising speculations that an agreement with the country's creditors may not be reached before the next Eurogroup meeting on April 24. Regarding the news that Greece might miss repayments due to the IMF in the first two weeks of May, IMF Manager Director Lagarde stated that the Fund had never had an advanced country request for delaying repayment. She noted, 'I would certainly, for myself, not support it". The IMF/G20 meeting in Washington and the Greek FM meeting with US President Barack Obama will be closely watched.
Looking ahead, the economic calendar is rather busy today. UK job data will be a major focus in European session. Claim count is expected to drop -27k in March with unemployment rate dropped to 5.6% in February. Upside surprise in the data could trigger a break of 1.4971 near term resistance in GBP/USD, which would build up the case for near term reversal. Eurozone will release current account and CPI. Swiss will release retail sales.
In US session, US CPI is expected to rise to 0.1% yoy in March with core CPI drop to 1.6% yoy. U of Michigan confidence and leading indicators will also be featured. Canada CPI and retail sales would be the main focus, which could fuel deeper fall in USD/CAD.