NEW YORK (BBH FX Strategy) -- The dollar is broadly weaker as Tuesday's correction appears to have run its course and most currencies held the bottom of their recent ranges.The euro is nearing recent highs around 1.33, but if cleared that would open up a test of the late February high around 1.35. Sterling is underperforming after the Bank of England minutes showed that two of nine voters wanted to expand QE.
Dutch bonds are under pressure. The Dutch benchmark yield is up 5 basis points Wednesday, the largest rise among core bonds and matches the rise in Portuguese benchmark yield. As Portugal does not need to issue bonds this year, the Dutch yield is more telling. Tuesday's report by the Dutch analytic bureau was even less sanguine about reaching the deficit targets than previously. It revised its deficit estimate to -4.6% of GDP for this year and next; a slight tweak from its previous -4.5% projection, but illustrates its confidence of the miss. The Turkish lira is outperforming today following hawkish comments from central bank governor Basci.TRY is down 3% this month, only outperforming BRL in the emerging markets space. We prefer to suspend judgment until the central bank meets March 27, but we recognize the potential for the rebound in TRY to continue. The 100-day moving average near 1.82 could be a near-term top for USD/TRY. On the downside, a break below the 1.80 level will open the door for a test of the 50- and 200-day moving averages, both just below the 1.7850 level.