BOJ Expected to Turn Hawkish in Potential Boost to Yen

SNB Interventions Keep Swiss Franc Stable

1404 GMT – Foreign exchange interventions by the Swiss National Bank are likely to have kept the Swiss franc stable despite recent troubles at Credit Suisse, ING says. “The SNB increasingly tells us it has been selling FX reserves to keep CHF stable—largely in line with monetary rather financial stability priorities,” ING analyst Chris Turner says in a note. “The SNB sold CHF27 billion of FX in the fourth quarter of 2022.” Financial stress and a weaker economic outlook probably means the SNB prefers to keep EUR/CHF in a range of 0.98-1.00 in the near-term, Turner says. EUR/CHF rises 0.1% to 0.9882.(renae.dyer@wsj.com)

Sterling’s Strength in March Looks Surprising Given Banking Turmoil

1401 GMT – Sterling’s strength in March was surprising, ING analyst Chris Turner says in a note. “Given the U.K.’s large current account deficit and its large financial sector, we’d have thought it would have underperformed during the recent financial turmoil,” Turner says. Investor positioning may have played a role in sterling’s rally in March where asset managers wrong-footed in bond markets had to buy back the currency to cover short positions that bet on it falling, he says. GBP/USD rises 0.4% to 1.2428 but EUR/GBP climbs 0.2% to 0.8787. (renae.dyer@wsj.com)

Euro Expected to Rise Further Vs Dollar

1319 GMT – The euro is likely to rise further versus the dollar this year as the Federal Reserve looks set to cut interest rates and the European Central Bank may keep rates higher for longer, ING says. Tighter credit conditions and greater evidence of a U.S. economic hard landing could see the Fed cut rates 100 basis points in the fourth quarter, ING analyst Chris Turner says in a note. “The European financial sector looks better positioned than the U.S.,” he says. “Higher for longer European Central Bank rates target EUR/USD at 1.15 by year-end.” EUR/USD rises 0.5% to 1.0915. (renae.dyer@wsj.com)

Canada Dollar Likely to Rise if Central Bank Delivers Hawkish Guidance

1126 GMT – The Bank of Canada is likely to hold interest rates at 4.50% at its next meeting but issue more hawkish-than-expected forward guidance that dampens rate-cut expectations, supporting the Canadian dollar, Bank of America says. The rates market currently sees the BOC cutting rates from the third quarter of 2023 with the policy rate dropping to 3% by September 2024 but that pricing seems too aggressive to BofA, which expects rate cuts starting in the first quarter of 2024, its analysts say in a note. “Any repricing of market expectation on the back of a hawkish BOC guidance should be bullish for the CAD.” The BOC holds its next meeting on April 12. (renae.dyer@wsj.com)

Dollar Could Extend Losses on U.S. Inflation Data

1057 GMT – The dollar falls as investors look ahead to data on Wednesday that are expected to show U.S. inflation eased to an annual rate of 5.2% in March from 6.0% in February, forex broker Tickmill Group says. “If such a drop is confirmed, or even surpassed, this should see Federal Reserve rate hike projections firmly lowered leading USD deeper still,” Tickmill analyst James Harte says in a note. The rally in risk assets is also weighing on the dollar due to its safe-haven status, he says. The DXY dollar index drops 0.5% to 102.066. (renae.dyer@wsj.com)

Euro in Narrow Range Vs Dollar, Awaiting Fresh Catalysts

0728 GMT – The euro is trading in a narrow range against the dollar after showing a muted reaction to Friday’s strong nonfarm payrolls data, ING says. If it weren’t for the Easter public holidays, EUR/USD may have fallen much further on the jobs data as it strengthened expectations for the Federal Reserve to raise interest rates by 25 basis points in May, ING analyst Chris Turner says in a note. EUR/USD is now waiting for fresh catalysts, probably from the U.S., he says. “EUR/USD can edge back up to the 1.0930/50 area today assuming that equities stay mildly bid and the U.S. NFIB [small business optimism index data at 1000 GMT] emerges on the soft side.” EUR/USD rises 0.3% to 1.0894. (renae.dyer@wsj.com)

Dollar Turns Lower as US Data Releases Loom

0657 GMT – The dollar falls after rising Monday on expectations for the Federal Reserve to raise interest rates further following Friday’s strong U.S. nonfarm payrolls data. “Looking at the rest of this week, market attention is set to remain on US economic data, including consumer price index inflation, retail sales, industrial production and the University of Michigan consumer sentiment index,” Unicredit Research analysts write. CPI data on Wednesday may show core inflation accelerated slightly, which could lift the dollar if markets further adjust Fed rate cut bets but only briefly as rate differentials between the U.S. and the rest of the world are expected to tighten, they say. The DXY dollar index falls 0.2% to 102.355. (renae.dyer@wsj.com)