Market Drivers – US Session 26/02/2023

Mohamed Abdelhamid 28 February, 2023 4:01 am Forex Market, Market Update

The US dollar began the new trading week extending positive performance although demand for the US currency diminished ahead of the US session’s opening, following a mixed United States Durable Goods Orders report.

Later on the day, the dollar Index fell 0.52% to 104.725, reversing gains from last Friday driven by an increase in the US Federal Reserve’s preferred inflation indicator, the Core PCE. After data on goods orders, the DXY decreased from approximately 105.100 to current quotations. It was typically a day of stronger US stocks and retreating Treasury yields.

Economic Data

US Durable Goods Orders fell by 4.5% MoM in January, worse than anticipated, although the core reading was slightly better than anticipated. Pending Home Sales, on the other hand, rose 8.1% in the same month, beating expectations.

Key Developments:

According to expectations, US President Joe Biden will consider the suspension of extensive limits on US investment in China that have been proposed by some hawks in his administration and Congress.
According to Politico, White House negotiations have been taking place as US President Biden scales back plans for an executive order to monitor US investments in China in favour of concentrating mostly on enhancing deal transparency.

Easing energy crisis concerns supported EUR/USD after European nat-gas prices fell to a 1-1/2 year low. The euro initially moved lower on weaker-than-expected Eurozone economic news on Feb economic confidence and Jan M3 money supply.

The European Central Bank officials repeated their hawkish rhetoric, reaffirming a 50 bps rate hike in March. Their US Federal Reserve counterparts, also lifted the bets, claiming they will do more if inflation does not come back down.

The EUR/USD pair recovered the 1.0600 threshold, as despite poor US figures, Wall Street ended the day with gains. The positive tone of equities weighed on the Greenback.

The UK and the EU have agreed to amend the Northern Ireland protocol. In a joint press conference with European Commission President Ursula von der Leyen on Monday, British Prime Minister Rishi Sunak announced a new “Windsor framework,” a decisive breakthrough to end uncertainty in Northern Ireland. The deal still needs to be approved but helped GBP/USD to remain afloat, with the pair currently trading around 1.2050.

AUD/USD flirted with the 0.6700 level, bouncing to end the day pretty much unchanged around 0.7635. Australian Retail Sales are coming up early Tuesday. The USD/CAD pair is down to 1.3580, while USD/JPY ended the day with modest losses around 136.20

Gold trades below $1,820 a troy ounce after falling to a fresh 2023 low of $1,806.52. Crude oil prices edged lower, with WTI now trading at $75.65 a barrel.

Also Read:
US Dollar retreats amid higher stocks, lower T-yields, easing EU energy crisis