A combination of better-than-expected statistics and hawkish central bank news flow contributed to the firming yesterday. The flash composite PMIs for February were higher than expected in the Eurozone and the UK, however the former remained below the critical 50 mark.
Meanwhile, the US composite PMI was in expansion mode, and the most recent initial jobless claims statistics were lower than expected.
On the monetary policy front, the ECB meeting minutes stated that the danger of cutting policy rates too soon was still believed to outweigh the risk of cutting too late, suggesting that an early reversal of last year’s rate hikes was extremely unlikely.
Currency-wise, the euro was in the ascendant early yesterday. However, the single currency was unable to maintain its gains, with sterling unaffected by the data.
The rest of today’s data schedule is very thin on both sides of the Atlantic. Meanwhile, senior ECB officials, including President Lagarde, will speak.