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The US Dollar retreated on Wednesday, though US yields jumped. Most European stock markets posted losses, and on Wall Street, US equities exhibited mixed performance.
The AUD/USD pair recovered from monthly lows by holding around the 0.6700 support. NZD/USD reached its highest level in two weeks on Wednesday, reaching 0.6275, making the Kiwi the strongest performer. USD/CAD slightly declined and is now around 1.3600.
Despite higher yields, gold increased for a second day in a row before hitting $1,845/oz as resistance. Bitcoin was unable to regain $24,000 and pulled back.
Economic Data In Play
The market was generally beaten after the release of the US ISM Manufacturing PMI but then recovered. The February Index rose to 47.7, showing the sector remains in contraction territory. The surprise came from the Price Paid Index, which jumped 6.8 points to 51.3 and triggered a sell-off in Treasuries and a short-lived recovery of the US Dollar. Currencies reflected somewhat more optimism than equities. Chinese PMIs rose above 50, leading to hopes for the economic outlook.
Key Developments
Following a trading day in which US and European bond yields spiked in response to inflation data, market participants will continue to pay close attention to the bond market. The Eurozone CPI, European Central Bank minutes, and US Initial Jobless Claims are all listed for Thursday on the economic calendar.
The Euro was among the top performers across the FX board, boosted by higher-than-expected German inflation numbers and hawkish ECB expectations. EUR/USD hit weekly highs near 1.0700 and then pulled back. The Pound lagged with GBP/USD testing levels under 1.2000. USD/JPY ended flat on Wednesday despite higher government bond yields.
Also Read:
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What does Wednesday’s ISM Manufacturing PMI data mean for US economy?
