Forex today: dollar mixed/firm, GBP/USD better-bid on Carney

FX today was moderately risk-off with a mixed dollar while equities and commodities were closing in the red again. 

The DXY was steady while European equities fell 0.9-1.1% lower in the benchmarks following a softer Asian session while markets await Trump's speech and key US data around the FOMC meeting that kicked off earlier. 

As per usual, month-end profit taking and squaring of books was a factor again along with higher bond yields, stretched valuations and potential US health-care shake-up seemed the main drivers, according to analysts at ANZ today.  

The market expects that the Trump speech will outline more government spending at expense of higher budget deficits, in turn, the weakening fiscal position is a long-term weight on the greenback. We also get the FOMC announcements and statement tomorrow ahead of nonfarm payrolls this week as well, so volatility could be on the cards in an otherwise narrow ATR environment on the charts and prices/indexes, within familiar ranges. 

As far as currencies go, cable was in focus on the back of Carney's speech which left it better-bid on the session with a test of the 100 hourly SMA at 1.4161 while ducking under flying Brexit knives. GBP/USD traded between 1.3980 and 1.4168 in one of the wider ranges of the pairs. 

The euro's progress was lagging due to the miss in the German CPI data. Analysts at ANZ explained that the strength in euro area GDP data is the focus for the market, with any dip in headline HICP inflation expected to prove transitory for now: "Euro area growth rose 2.7% y/y in Q4 following Q3’s 2.8% rise – the strongest growth performance in a decade." EUR/USD traded between 1.2334 and 1.2454.

EUR/GBP was thrown below the hourly SMA at 0.8794 in late London despite Brexit concerns and EZ Q4 GDP strong but expected 2.7%  with markets more focussed on the German's CPI miss before the cross ended NY at 0.8765 -0.34% on the US session with Carney adding fuel to the bear's fire. 

USD/JPY bulls remain trapped with the price below and failing at the 200 hourly SMA which could lead to a re-test of the recent lows of 108.27 and squeeze out the remaining hardened bulls that are vulnerable to the risk of a not so hawkish hold as the outcome of tomorrow's FOMC, (unlikely though considering Growth impulses are stronger, even though Q4 GDP disappointed). US 10-year yields closed at 2.71% from the previous 2.70% and the price ranged between 108.41/20.

As far as the higher betas, AUD and the Kiwi held up well considering the commodity prices today.oil prices were down 1.8% and gold was down on higher yields which weighed on energy stocks. Nonetheless, AUD/USD walked in at 0.8090 and moved up to  0.8110 before non-committed bulls took their profits and offers came in until 0.8070 ahead of AU Q4 CPI and Trump's SOTU and the Fed. The Kiwi traded between 0.7325 and 0.7355.

Key events ahead in Asia

AU Q4 CPI and Trump's SOTU and the Fed

Key notes in US

• Health-care sector triggered Wall Street's worse two-day slump in eight months
• Carney's Speech draws to a close, remaining headlines and a firm pound as the outcome
• Dollar still firm on strong dollar Mnuchin and his 3% growth outlook