Market wrap: dollar rises on Trump's strong dollar administration - Westpac

In a market wrap, analysts at Westpac explained that the US dollar rose following comments from new economic advisor Kudlow that Trump favoured a stronger dollar.

Key Quotes:

"The US dollar rose following comments from new economic advisor Kudlow that Trump favoured a stronger dollar. Commodity currencies AUD, NZD and CAD were the worst performers, perhaps weighed down by the US’ protectionist stance. Equities are slightly lower, bond yields slightly higher.

Interest rates: The US 10yr treasury yield rose from 2.80% to 2.83, while 2yr yields rose from 2.25% to 2.29%. Fed fund futures continued to price three more hikes by end-2018 (with 21 March a 90% chance), and another hike in 2019.

Currencies: The USD index is up 0.4% on the day. EUR fell from 1.2380 to 1.2315. USD/JPY rose from 105.80 to 106.30. Underperformer AUD fell from 0.7860 to 0.7802. NZD, which earlier had completely retraced GDP-related losses, fell from 0.7330 to 0.7272. AUD/NZD slipped from 1.0760 to 1.0720.

Economic Wrap

US March business surveys remain robust. The NY Fed Empire and Philly surveys moved in opposite directions in March, the Empire survey rising from 13.1 to 22.5 while the Philly Fed index slipped 3.5pts, albeit to a still solid 22.3. Both surveys featured strong increases in new orders and shipments. The jump in global market volatility and heightened global trade concerns do not appear to be hurting sentiment just yet. The NAHB survey of homebuilder sentiment eased from 71 to 70 while jobless claims continue to hover around generational lows, 226k last week.

Monetary policy and rates from the central banks of Switzerland (SNB) and Norway (and Norges Bank) were left unchanged. Although they both outlined more positive economic backdrops, they diverged in their bias. SNB actually lowered, if marginally, their inflation profile for the next two years and reiterated their maintaining of NIRP and currency guidance to avoid CHF strength, whilst Norges Bank indicated the bringing forward of their potential first interest rate rise to “after summer” (from year-end) within a projected series of rate hikes and firmer forecasts."