Forex Afternoon Wrap for 25th February

Key Forex Afternoon Notes:

• Australia construction work done q/q -0.2% vs. -1.2%
• Australia wage index q/q 0.6% vs. 0.6%
• China HSBC flash manufacturing PMI 50.1 vs. 49.6
• UK, BBA mortgage approvals 36.4k vs. 36.2k

Later

• ECB Draghi Speech
• Fed Chair Janet Yellen testifies to the Senate Banking committee – Day 2
• US new home sales
• New Zealand trade balance

The Yen failed to keep its gains from yesterday’s Janet Yellen’s testimony and was trading mixed since today’s trading session. While mildly stronger against the Greenback, the Yen weakened against other pairs such as the British Sterling and the Kiwi Dollar. The Asian session mostly saw the release of data from Australia which included the construction work and the average wage index, both of which managed to stay on the positive. The Aussie dollar saw an early rally since the start of the Asian trading session, reaching intraday highs of 0.789 briefly during the day, to ease back on the gains to trade at 0.788 at the time of writing. The Kiwi dollar was also considerably stronger, rising towards 0.756 levels since yesterday’s release of the Fed chair’s testimony.

The same theme also played out on the Canadian dollar which managed to rally, especially after BoC Governor Stephen Poloz’s speech yesterday, which the markets viewed as being neutral as compared to expectations of a dovish outlook from the Canadian Central Bank. USDCAD eased from its previous highs of 1.26 to trade below the 1.25 handle at the time of writing.

There was not much of economic data due from Europe with the exception of the UK BBA mortgage approvals which managed to beat estimates. The British Sterling was bullish since yesterday and managed to push the gains towards 1.55 levels against the Greenback before showing signs of easing back from these monthly highs. EURGBP in particular was back to trading near the 12 month low at 0.7316.

The Euro remained directionless briefly rallying towards 1.1388 before falling back to 1.13 levels at the time of writing. The pair continues to trade within the larger range with no clear direction being established yet.

The US trading session is light with Janet Yellen taking center stage again on day 2 of the Senate Banking Committee testimony. US home sales data and ECB President Mario Draghi’s speech will also be the focus of attention. Draghi is expected to testify before the European parliament on the ECB’s monetary policy issues and which something could likely bring volatility to the Euro as well as the Greenback.