NEW YORK ( BBH FX Strategy) -- The U.S. dollar is continuing its broad rally as doubts over Greece persist, although currencies continue to trade in relatively tight ranges.Overall, G10 currencies are mostly weaker against the dollar with the Japanese yen down 0.6%, currently trading at 80.31. Sterling is trailing gains in the yen, down 0.5% against the dollar. The Bank of England minutes revealed a more dovish voting arrangement than expected with two members voting for a 75-billion-pound expansion of QE. The euro continues to slide for the second day, down 0.1% to 1.322 but is likely to remain confined to its recent range of 1.298 to 1.330. Near-term support is seen at 1.313 with resistance seen at the upper end of the recent range. The Australian dollar is trading lower to 1.063.
As we have argued, China policy makers are stepping up to try to stem the growing downside economic risks. Overnight we had modestly supportive news relating to the bank lending and real-estate, as well as an improvement in the unofficial February manufacturing PMI from 48.8 to 49.7. The Shanghai government has reintroduced a rule allowing people with at least three years of official residency to buy a second home. We take this as a sign that action is moving ahead of official rhetoric, which has continued to be on the restrictive side. The local media suggest that China's four big banks are increasing lending toward the end of February, even though lending is still falling well short of expectations.