Market wrap: dollar higher, but why? - Westpac

Analysts at Westpac explained that the US dollar rose across the board Friday, backed by higher yields, but without an obvious news or data catalyst. 

Key Quotes:

"The rise in the US 10yr treasury yield that began on Wednesday extended into Friday’s New York close, from 2.91% to 2.96%, slightly above the February 2018 high and thus the highest since Jan 2014. Two year yields rose from 2.43% to 2.46% - the highest since 2008. Fed fund futures yields continued to price the next rate hike in June around a 90% chance (Bloomberg calculations). 

US equities traded poorly but there were no economic data catalysts. There was Fedspeak from Kashkari, who was surprised the 10yr bond yields hadn’t risen further; Brainard, who repeated the gradual rate hike mantra; and Evans, who said a pickup in inflation would be welcome. The Fed now goes silent ahead of next week’s FOMC policy meeting.

EUR/USD fell from 1.2350 to 1.2250 before steadying around 1.2280. There were mixed news stories on the ECB, with one saying that the June meeting might be too soon to decide on ending asset purchases and another playing down the recent softening in Eurozone data. GBP/USD starts the week around 1.4000, about -0.6% on the day, typical of the broad USD move.

AUD/USD fell from 0.7730 early Friday to a low of 0.7655. NZD was weakest in the G10, falling from 0.7270 to 0.7201, -0.75% over 24 hours. AUD/NZD however didn’t break recent ranges, consolidating around 1.0630/40.

USD/JPY rose about 40 pips to 107.80, the defensive yen performing second best overall. USD/CAD bounced from under 1.2640 to 1.2760, a move kicked off by Canadian data. While Feb retail sales matched expectations, CPI printed a little softer than forecast."