FX Market Review: RBC Capital Markets

Day ahead: Today's event highlights are RBA minutes of their March meeting (see AUD), the BoJ meeting (see JPY), and the Bank Indonesia meeting where expectations are that they will leave the reference rate on hold at 7.50% (only 2/17 forecasters calling for a cut). 
Also today, we should get February FDI from China. Recall January saw the largest FDI jump in four years. 

AUD: RBA minutes for their early March meeting will be watched for any insight into their bias to ease policy rates further. The RBA disappointed a minority of forecasters looking for another cut at the last meeting, but the market is still priced for another cut by the end of the year and our forecasts agree with that. Any opinions on how elevated they believe the currency still is after reaching multi-year lows will also attract attention. 

JPY: The BoJ meets today and expectations are for an overall status quo message from the Bank.

USD: US data out overnight was generally disappointing, with the empire manufacturing survey (headline: 6.90 vs. estimate 8.00), February industrial production (0.1% m/m vs. est. 0.2%), and NAHB housing index (53 vs. est. 56) all slightly softer than expected. Digging through the details though, our US strategists note a few reasons why the overnight string of data should be taken with a grain of salt, the foremost of which is extreme weather that we have seen weigh on other activity releases lately.

EUR: At an event in Frankfurt, ECB President Draghi drove home the message that further fiscal consolidation is essential. He highlighted that a "sustained recovery is taking hold", but also that the "current upturn in economic conditions ... must be used" as an opportunity for fiscal reforms. QE purchases from the ECB were confirmed to be bn in the first week of the programme, as wealready heard verbally from Coeure.

CAD: International securities transactions data has been a very volatile series recently, and in January data showed a net inflow of CAD5.7bn (est. -2.0bn), after an outflow of 13.5bn in December. Much of the inflow into bonds were sub-sovereign/corporate and denominated in foreign currencies. Generally speaking though the data have not had much influence on CAD lately. Tonight we get themanufacturing sales data for January, the first key release of the week. RBC is more pessimistic than consensus in calling for a drop of 2.1% m/m (cons: -1.2%).