The Dollar Hits Resistance on Profit-Taking Ahead of the Weekend

Profit-taking into the weekend was the order of the day during the Asian session, with the USD struggling to make further gains after its two-day rally.

On the data front, headline Singapore non-oil domestic exports staged a mighty rebound in February, rising 30.5 percent y/y versus consensus estimates of +16.2 percent after a strong performance by the volatile pharmaceutical sector and the electronics sector. Electronics exports grew 23.3 percent y/y after a 10.9 percent decline in January while pharmaceutical shipments rose 44.5 percent following a 20.2 percent rise in January, though the data series is still suffering from distortions due to the Lunar New Year holidays. Generally, the better data was ignored as analysts view the underlying theme of a weaker exports outlook as unchanged. Consequently, USDSGD showed little reaction.

Minutes from the BOJ’s February 13-14 meeting, where the central bank announced additional easing measures and the adopting of an inflation target of 1%, showed some members suggesting a 1-2 percent target range and one member asking for 2 percent outright. Compromise resulted in a 1 percent goal, though, with an aim to achieve inflation of 2 percent or less in the longer-term.

The Swiss National Bank failed to deliver on market expectations overnight, announcing no changes to the EURCHF floor but merely reiterating that the 1.20 floor would be enforced and it stood prepared to buy FX in unlimited amounts. EURCHF retreated back below 1.21 on the announcement and now looks sidelined again for another month.

Overnight data reinforced the improving outlook for US labour markets, with weekly jobless claims falling to match a 4-year low and employment components of regional manufacturing surveys improving further. Weekly jobless claims fell to 351k from a revised 365k the previous week, ensuring the 4-week moving average held steady at 356k for the second straight week, while continuing claims dipped below the 3,400k mark for the first time since Q3 2008. Both the Empire Manufacturing survey and the Philadelphia Fed survey beat forecasts on the headline, with the former rising to 20.21 from 19.53 (17.50 expected) and the latter improving to 12.5 from 10.2 (12.0 expected). However, details showed a weak new orders sub-category in both surveys suggesting momentum may be slowing in the manufacturing sector.