EUR/USD trades in increasingly narrow range

•     EUR/USD trades in increasingly narrow range

–    Stronger Eurozone data (better-than-expected Ifo survey) meets weaker US data (weaker-than-expected US durable goods orders)

–    But EUR/USD daily range continues to narrow, implying increased consensus on price

–    US rate expectations, bond yields rise on higher oil prices = should support USD

•     Oil surges on Saudi air strikes in Yemen

–    Saudi Arabia began bombing Yemen to prevent unrest there from spreading

–    Yemen borders Bab el-Mandeb, a narrow 3.2km straits. 3.8mn b/d of oil passes through it. If this were closed, oil would have to travel much further reach markets

–    So far many ME threats have had no impact on supplies. I expect this one won’t either and prices will eventually fall back on rising US inventories. But no one knows when.

•     Higher oil pushes up US rates, hits some currencies &helps others

–    US rates & rate expectations rise despite weak data as oil prices rise

–    AUD & NZD fall on increased risk aversion; CAD & NOK gain on higher oil prices

•     Today:

–    Eurozone: M3 money supply figures, bank lending for Feb; bank lending may finally turn positive yoy

–    Norway:  AKU unemployment rate expected to be unchanged

–    UK: Retail sales for Feb expected to rise; could boost GBP

–    US:  Weekly jobless claims, Markit service-sector PMI