USD Slides, AUD in Focus Next

The yen was the worst performer while the euro and loonie led the way. The Asia-Pacific highlight is the RBA's quarterly statement on the economy and it could tip the nod about what Stevens will do next. 2 Premium Trades will be issued shortly ahead of the RBA statement due in 90 mins from now.

Markets are often volatile at turning points so the changeable sentiment towards the US dollar this week might be a warning sign. Then again, it could be apprehension ahead of non-farm payrolls or the start of a period of consolidation after a long, one-way move.

Economic data continues to send mixed signals. The US trade deficit in December was unexpectedly large at $46.6 billion compared to $38.0 billion expected. That led to Q4 GDP estimate revisions to as low as 2.0% from 2.6% in the first official release.

On the flipside, initial jobless claims were lower at 278K compared to the 290K consensus. A key factor in the jobs report – perhaps equal to jobs gains – will be wage growth. A preview came in the Q4 unit labor cost data with a 2.7% rise compared to 1.2% expected. It was entirely mitigated by a downward revision to Q3 data but the Fed may focus on the near-term trend rather than the older data.

The subtext in trading remains the Greek drama. The first meeting betweenScheauble and Varoufakis was wholly unsuccessful but that's not a surprise. Comments afterwards were diplomatic and that could mean the start of a better relationship.

Up next, the RBA releases the Statement on Monetary Policy at 030 GMT. Lower revisions to growth and inflation are a given but comments on the Australian dollar and rates will be critical for the market. Sevens was mum on what's next for rates at this week's decision but after yesterday's soft retail sales report, another cut in March is possible.