Currencies in consolidation phase as traders await key data
March 9th - After the Bank of Japan elected not to keep its ultra-lax monetary policy in place any little longer, attention is now set to shift to the US trade deficit data - and perhaps to a lesser extent the Bank of England rate decision - both of which are due later in the session. Major currency pairs have largely continued to trade in tight ranges through the Asian session and although the dollar rallied against the Yen on the back of the BoJ announcement, these gains proved to be somewhat short lived. Consensus amongst traders is that UK interest rates will be left unchanged, but obviously any surprises or suggestions as to if the policy will be eased again in the near term could send cable back down to levels not seen since the end of last year. US trade deficit data will also be under scrutiny in case there's another widening - last month's TICS data failed to cover the deficit and although in isolation this isn't much of an issue, an extended run like this could leave investors nervous, in turn weighing on the dollar. Although oil prices are now falling, the situation in Iran is once again in question and cheaper crude will take some time to filter through into the balance of trade data, so with today's announcements, tomorrow's non-farm payrolls and the TICS data due next Wednesday, currencies - and especially the greenback - could again be in for an active few days.
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