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Foreign Currency Intervention

·      The SNB reports CHF 21.1 billion in foreign currency interventions in 2021, which is significantly less than the CHF 109.7 billion reported in 2020. The interventions are described as “necessary to contribute to appropriate monetary conditions.”

·      This is according to the SNB’s recently released annual report.

Europe

• There is nothing major on the agenda in Europe today.
• The focus will remain on the bond market.
• The dollar is holding firmer on the day, with USD/JPY looking to seal a breakout above 120.00, trading to new highs in over six years. The bond market has largely fueled the mood, with Treasuries experiencing a historic sell-off after Fed Chair Powell opened the door to a faster pace of rate hikes.
• Adding to that is the further flattening of the yield curve, which is raising concerns about the economy’s prospects in the coming months. However, the Fed has made it clear that their primary goal is now inflation, so we’ll see how they decide to strike a balance there.
• Looking ahead, there isn’t much on the calendar to divert attention away from the general risk mood and bond market focus.
• 9:00 a.m. GMT – Eurozone current account balance for January
• 1000 GMT – January construction output in the Eurozone 1100 GMT – UK March CBI trends total orders, selling prices

Dollar

• The dollar is being boosted by higher yields, and the USD/JPY is rising.
• The greenback is holding firmer so far today.
• The dollar can thank Fed Chair Powell for the latest push higher today, after he helped to open the door for 50 basis point rate hikes in the coming FOMC meetings.
• This contributed to a further extension of the Treasury yields breakout, leaving plenty of upside potential for USD/JPY at the moment. Elsewhere, the dollar is shining, with EUR/USD on track for a third consecutive day of declines after failing to hold above 1.1100:
• Sellers now have near-term control following a break below the 100 and 200-hour moving averages, with a drop below 1.1000 increasing the pair’s downside risks in the short term. Aside from that, GBP/USD is still seeing 1.3200 rejections, and the most recent one is a bit of a setback for buyers as the price is also dropping past the 100-hour moving average:
• As a result, the near-term bias is now more neutral, with support seen at the 200-hour moving average @ 1.3107. A break below that level opens the door to a possible drop back towards 1.3000 for cable next.