Forex Flash: Majors up as sentiment improves - OCBC Bank

Emmanuel Ng of OCBC Bank notes that the majors crept cautiously higher against the dollar on Tuesday as global sentiment improved (Dow sets new record) while the non-manufacturing ISM improved).

Meanwhile EUR also found some support from an improving February composite PMI and during the Asian session, investors were also cheered after China´s NPC meeting did not indicate an intention to unduly tighten monetary conditions. Looking to AUD, he notes that the currency was a broad out performer on the back of the improvement in risk appetite while the unit also received an early boost after the RBA cited improvements in the non-mining domestic economy - a previous area of concern for the central bank.

Meanwhile, looking to cable, Ng notes that the pair relinquished intra-day highs above 1.5150 to end
largely unchanged. Regarding the yen, he adds that the currency was a mixed bag with comments from two deputy BOJ governor nominees yielding a less than concerted approach towards unconventional monetary accommodation while markets persisted with cited position adjustments. Looking ahead, Ng recommends looking towards the Fed Beige Book for broader dollar prospects, while the BoC rate decision may also provide a minor focus for the CAD. In the meantime, he feels that markets may also hold their fire ahead of the ECB, BoE and BoJ meets on Thursday.