Forex: Yen Indicated Strength Ahead of Core Machinery Orders

In Early Asia on Monday, the yen indicated a touch of strength ahead of core machinery orders as the Forex market gears up for what key central bank policy analyses and a possible formal announcement from Britain on plans to exit the European Union.

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In Early Asia on Monday, the yen indicated a touch of strength  ahead of core machinery orders as the Forex market gears up for what key central bank policy analyses and a possible formal announcement from Britain on plans to exit the European Union.

The U.S. dollar index, which gauges  the greenback’s strong point against a trade-weighted basket of six major currencies, was last cited at 101.38. On March 10 it reached 101.17, its lowest since February 28, during disappointment that wages in the U.S. only grew slowly.

In Japan, core machinery orders for January are set with a 3.3% decline seen YoY and a 0.5% increase expected month-on-month. USD/JPY was last quoted at 114.79, down 0.01%.

AUD/USD was last quoted at 0.7543, increase 0.01%. GBP/USD starts what could be a momentous week off at 1.2165, down 0.04%.

In the week onwards,  global financial markets will be busy with central bank meetings, with policy decisions set in the U.S., Japan, the U.K and Switzerland. Investors will also look out very carefully for headlines coming out of a two-day meeting of G20 central bankers and finance ministers in Germany for additional indications on the strength of the global economy and the future direction of monetary policy.

The previous week, the U.S. dollar retreated against a basket of the other major currencies on Friday, after the current U.S. employment report indicated that job growth beat expectations, but wage development stayed tepid.

The U.S. economy added 235,000 employments in February from the previous month, as the construction sector recorded its biggest  gain in almost  10 years due to unexpectedly warm weather, the Labor Department said Friday.

In January, the unemployment rate marked down to 4.7% from 4.8%, even as more people hurried into the labor market.

However, average hourly earnings increased just 0.2% in February from a year before, below expectations for a 0.3% increase. The small gain, boosted the YoY increase in earnings to 2.8%, disappointing some investors.

U.S. short-term interest rate futures slightly changed following the employment report, according to the report,  underscoring the likelihood that the U.S. central bank will increase rates in the coming week and two more times in 2017.

The euro soared late on Friday, after a report surfaced that the European Central Bank had discussed the probability of introducing a rate hike before the end of its quantitative easing program.

The report came fresh off the heels of a rather hawkish remarks from ECB President Mario Draghi at the bank’s post-policy meeting press conference on Thursday. Mr. Draghi said “there is no longer that sense of urgency” for the central bank to use ultra-loose monetary policy to attain its mandates.

It was confirmed by U.K. Prime Minister Theresa May during a press conference in Brussels that Britain would start exit negotiations with the EU by the end of this month.

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