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Amid ongoing indications of inflation losing steam on both sides of the Atlantic and consistent wagers that the Fed and the ECB will cut interest rates at some point this summer, the US dollar’s continuing purchasing pressure put additional pressure on the risk-linked assets.
Economic Data
The personal consumption expenditures price index, considered the Federal Reserve’s preferred inflation gauge, showed a 0.3% rise in January compared to December. Similarly, the core index, which excludes volatile food and energy prices, saw a 0.4% increase. These figures aligned with economists’ expectations, and given the upward trajectory of stocks throughout the year; some investors perceived the absence of hotter-than-expected inflation news as a less problematic macro signal.
Key Developments
The USD Index (DXY) advanced for the third straight session, regaining the 104.00 barrier, and above, due to additional advances in the Dollar. The final S&P Global Manufacturing PMI is due in the first turn at the end of the week, followed by the always-relevant ISM Manufacturing PMI, the final Michigan Consumer Sentiment, and Construction Spending. Williams, Logan, Waller, Bostic, Daly, and Kluger of the Fed are also scheduled to speak.
A fresh increase in the US dollar’s positive momentum caused EUR/USD to decline further and test the important support level at 1.0800. On March 1, the preliminary February inflation data, the unemployment rate, and the final Manufacturing PMI for Germany and the entire Eurozone will be the main events in the region.
GBP/USD dropped to multiday lows, indicating that a visit to the 1.2600 zone is likely to occur soon. March 1st is when the S&P Global Manufacturing PMI and Nationwide Housing Prices are expected to be released.
USD/JPY resumed the downward bias and revisited the 149.20 region in response to investors’ repricing of a potential BoJ lift-off sooner than anticipated. The Unemployment Rate and February’s Consumer Confidence are due in “The Land of the Rising Sun” on March 1.
AUD/USD loses further momentum and breaches the 0.6500 support on the back of Chinese concerns and Dollar strength. In Oz, Commodity Prices will be the sole release on Friday.
Investors’ attention is expected to refocus on China with the release of Manufacturing PMIs tracked by the NBS and Caixin on March 1. USD/CNH reversed a multi-day positive streak and dropped marginally to the 7.2100 zone on Thursday.
WTI prices extended further their erratic performance in the upper end of the recent range around the $78.00 mark per barrel. Gold prices climbed to four-week highs and retested the $2,050 region per troy ounce amidst lower yields and despite decent gains in the dollar.
Also Read:
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