US Dollar Weakens on Concerns for Weaker Payrolls on Friday (page 2 of 2)

Although most BoE members are optimistic about growth, their views on inflation have been very mixed. Blanchflower thinks that inflation will remain low and fall below their target while Sentence expects the exact opposite. According to the BRC, shop prices eased in the month of February, which supports Blanchflower's case for the time being.

Japanese Yen - The Japanese Yen crosses have struggled to extend their rebound after yesterday's impressive rally. Having opened higher in the Asian and European session, most of the Yen crosses with the exception of CHF/JPY have fallen back into the red. On an otherwise quiet trading day, the Japanese Yen continued to drive market activity. Take the Canadian dollar for example. A drop in oil inventories, a slew of stronger Canadian data and a rise in oil prices have failed to rally the currency. Any attempt to rebound was erased by the selling of the Canadian dollar against the Japanese Yen. The same was seen in the New Zealand dollar, which turned lower despite a rate hike and hawkish comments from the central bank. The Bank of Japan is still not stepping in to stem the currency's rise, which is providing a green light for traders to continue to buy the Yen. To find out whether we think the carry trade liquidation is over, read our Special Report.

Commodity Currencies (CAD, AUD, NZD) - The Canadian and New Zealand dollars fell victim to Yen strength, leaving the Australian dollar as the only commodity currency that did not see its weakness against the Yen filter into weakness against the dollar. Although there was no Canadian data release, oil inventories dropped, sending crude prices up over $1 to $61.79. Canada has enjoyed stronger data over the past few days which should have been positive for the Loonie. The same was true in New Zealand. Not only did the Reserve Bank raise interest rates from 7.25 to 7.50 percent, they also signaled that more rate hikes will probably be needed. They felt that inflation risks were considerable thanks to a reacceleration in the housing market and strong overall growth. Bear in mind, New Zealand is one of the few central banks still considering raising rates. Meanwhile Australia also reported stronger data last night even though the Reserve Bank of Australia left interest rates unchanged. Fourth quarter GDP jumped by 1.0 percent on a quarterly basis and 2.8 percent on an annualized basis. The quarterly improvement was double expectations. There is no further Australian data tonight, but New Zealand will be reporting its Q4 terms of trade and Canada will be releasing its housing starts and new housing price reports.