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Volatility Picks Up As USD Strengthens Into Quarter End

With US Personal Consumption Expenditures – Price Index on the way later today, as well as US Jobless data, traders will be watching the USD, which is showing strength as we approach the last trading days of March. USDJPY was up to 107.00 at one point overnight, helped by easing tensions with North Korea. Gold was down to a low of 1322.00 due to a strong USD. Stocks had a mixed day, with Europe flat or higher but the US markets remained down, especially the Nasdaq, which was 1.06% lower at the close.

German Gfk Consumer Confidence Survey (Apr) was 10.9 v an expected 10.7, against the previous 10.8. This number came in better than expected and is almost back to the February high of 11.0, which was the highest level in more than seventeen years. With confidence being so high amongst consumers, the economy and demand in-general remains high. EURUSD slipped from 1.24069 to 1.23835 following this data release.

US Gross Domestic Product Annualized (Q4) data came in at 2.9%, from an expected 2.7%, against a previous 2.5%. Gross Domestic Product Price Index (Q4) data was as expected, unchanged at 2.3%. Also at this time, Core Personal Consumption Expenditures (QoQ) (Q4) was as expected, unchanged from the Q3 reading, at 1.9%. Personal Consumption Expenditure Prices (QoQ) (Q4) was also as expected, unchanged at 2.7%. USDJPY fell from 106.340 to 106.066 in reaction to the numbers released.

Pending Home Sales (YoY) (Feb) came in at -4.4% v an expected -0.2%, against a prior reading of -1.7%, which was revised down to -1.9%. Pending Home Sales (MoM) (Feb) was 3.1% v an expected 2.1%, against a prior reading of -4.7%, which was revised down to -5.0%. These data points were a mixed bag. While both previous numbers were revised lower, the year-on-year figure declined substantially and the month-on-month figure showed a strong rebound after the decline last month. The New Year is usually the worst time for US home sales, with a strong rebound in February. EURUSD moved up from 1.23369 to 1.23598 due to this data release.

FOMC Member Bostic spoke at the Atlanta Society of Finance and Investment Professionals luncheon. Some of his comments were: that he thinks the Fed needs to get back to neutral rate and he doesn’t read too much into stock market volatility. A gradual approach to interest rates is better than big jumps and inflation is rising, looking at 6-month core gauge.

New Zealand Building Permits s.a. (MoM) (Feb) were released, coming in at 5.7% against 0.2% previously, which was revised down to 0.0%. This data series can be quite volatile, having swung between 20 and -10 over the last six years. The November reading was 10.8%, while December was -9.6%. NZDUSD fell from 0.72094 to 0.72023.

EURUSD is up 0.21% overnight, trading around 1.23334.

USDJPY is down -0.33% in early session trading at around 106.490.

GBPUSD is up 0.209% this morning, trading around 1.40897.

USDCAD is down -0.10% in early trade at around 1.29082.

Gold is up 0.22% in early morning trading at around $1,328.27.

WTI is down -0.06% this morning, trading around $64.65.

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