– EURCHF supported by SNB and Spanish debt auction
NOK was the under performer in the european session, hurt by a more dovish Norges Bank statement, causing EURNOK to rally back to mid-Feb highs above 7.5000. Meanwhile, EURCHF has continued to recover helped with peripheral spreads staying calm and the SNB signalling accommodative policy remaining in place for longer. The longer-dated Spanish auctions went well resulting in lower average yields and higher bid-cover ratios compared to prior auctions. Meanwhile, AUD has continued to remain the star performer following a very strong February employment report, leading OIS markets to price out the prospect for rate cuts. Our technical analyst thinks the recovery in spot could extend to 1.0413, which is the 50% retracement of the Jan-March decline. The data calendar is fairly light in the US, save the release of the producer price data. Our economists expect an unchanged print of 0.2% m/m for core-PPI, a touch stronger than the consensus. This could keep the USD stronger against the lower yielding CHF and JPY.
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BNP Paribas