Market Drivers – US Session 28/02/2023

Mohamed Abdelhamid 1 March, 2023 3:08 am Forex Market, Market Update

The US dollar managed to recover some of its early losses, but the day still ended unevenly. In spite of month-end flows, correlations were off, but risk aversion was unaffected. As Wall Street ended neutral, the majority of European indexes closed the day in the red.

Key Developments

The focus was on higher-than-expected inflation in Spain and France, which increased speculation that the ECB would keep tightening monetary policy for longer than anticipated. Moreover, US consumer confidence dropped for a second consecutive month in February, which had a negative impact on the US dollar. Positively, the data also revealed a drop in inflation predictions from the prior month.

EUR/USD peaked at 1.0644, but turned south during the American afternoon and now hovers around 1.0590.

The “Windsor Framework,” which was intended to address problems brought on by the Northern Ireland Protocol, was concluded by the EU and the UK, sending the GBP/USD pair soaring to 1.2143. Later, the pair yielded to USD demand, and it is now trading around 1.2050.

AUD/USD is little changed on a daily basis, trading at around 0.6730. Australia will publish Q4 GDP figures early on Wednesday.

USD/CAD surged and stands near an intraday high of 1.3632 as Canada’s GDP unexpectedly shrank 0.1% MoM in December. The country reported null annual growth in the last quarter of 2022, much worse than the 1.5% advance expected.

Weaker US government bond yields and worse stock markets hurt the USD/JPY, which fell on Tuesday and is now trading at about 136.10.

Due to the demand for safety, gold prices increased and are currently circling about $1,828 per troy ounce. The price of crude oil is rising, with WTI currently trading at $76.80 a barrel.

Economic Data

The US Consumer Confidence Index, for February, retreated to 102.9. Concerns about a likely recession are growing as a result of high prices and rising interest rates.

According to a survey from ISM-Chicago and MNI, the Chicago Business Barometer, often known as the Chicago PMI, decreased to 43.6 in February from 44.3 the previous month. The 20-city S&P CoreLogic Case-Shiller House Price Index saw a 0.5% decline in December as well.

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