Daily FX Wrap: UK Budget underpins Gbp, BoC clobbers Cad and Trump dumps Dollar

An eventful 2nd half, but not due to what appeared to be Tuesday’s headline data as US CPI metrics matched consensus and hardly budged 2018 Fed rate hike expectations as a result. The UK’s Spring Budget did lift the Pound with a modest GDP forecast upgrade from the OBR for this year arguably understating Chancellor Hammond’s upbeat economic assessment, but fiscal projections underlining improved revenues and smaller deficits, although the DMO issuance remit was at the upper end of the survey range and above consensus. Cable reclaimed 1.3900+ status and then hit highs around 1.3975 amidst a broad Usd sell-off on news that US President Trump has ousted Secretary of State Tillerson and plans to replace him with CIA chief Pompeo. This also saw Nzd/Usd climb further above 0.7300 and test 0.7350 as macro offers between 0.7340-50 were absorbed before some squaring up and consolidation ahead of Thursday’s big Canadian data (Q4 GDP). Eur/Usd surpassed 1.2350 and its 30 DMA around 1.2345, but needs to close above for further gains towards 1.2400 and resistance from 1.2405-10 from a technical perspective, while Aud/Usd almost toughed 0.7900 before easing back alongside the Kiwi. Usd/Jpy retreated through 107.00 having traded just over 107.20 resist on all round Jpy selling as stops/buy-orders were triggered in the headline pair and crosses, while Usd/Chf pulled back to sub-0.9450 levels vs 0.9500+ recent peaks. Conversely, Usd/Cad rebounded sharply from around 1.2830 to test offers through 1.2900 and up to 1.2910, but stopped just short of the next supply at 1.2950 as the latest Trump inspired Greenback selling was more than offset by a still cautious BoC Governor Poloz (citing slack in economy and labour market). Still to come, RBA Deputy Governor Kent and BoJ minutes.