Tag Archives: USD

As expected, the ECB left monetary policy unchanged yesterday. Furthermore, the central bank maintained that interest rates are at a level that should significantly contribute to returning inflation to 2%.

Meanwhile, at the press conference, President Lagarde stated that the ECB will have much more data in June’s meeting, implying that an April rate decrease is unlikely.

In the immediate wake of the meeting’s announcement, market rate expectations fell slightly. However, as the day went on, the euro recovered its losses, while the dollar experienced some downward pressure.

Today’s focus will be on February’s US labour market data. Payrolls are expected to rise by 200k, down from a 353k increase in January. The unemployment rate is predicted to continue at 3.7%, while average earnings growth will decrease. The date represents some event risk for the dollar today.

In today’s economic calendar a mixture of data has already been released. The number of purchase orders placed with German manufacturers has significantly dropped by – 11.3 percent in February. 

The change in the price of UK homes rose by 0.4 percent in February, this is the fifth consecutive month house prices have increased.

This afternoon, the European Central Bank are set to hold interest rates at 4.5 percent. Inflation in the EU remains above the 2 percent target rate at 2.5 percent.

Yesterday the Chancellor of Exchequer Jeremy Hunt outlined his fiscal plan for the following financial year. The main talking point was Hunt announced a 2p reduction to the National insurance, meaning the average employee will retain an additional £450 per year.

The Pound reacted positively against the Dollar yesterday afternoon after the Fed Chair Powell’s testimony showed no signs of support for the Dollar.

 GBPUSD has marked its fifth straight day of continuous gains, helping the Pound achieve a one month high against the Dollar.

 On the other hand, GBPEUR has been trading in a tight 50-point range since the start of March. Investors will pay close attention to ECB President Lagarde’s comments later on today to understand her views on future growth and when rate cuts will commence.

Data-wise, yesterday’s economic reports were largely underwhelming. The Eurozone’s money supply and loan growth data for January were consistent with a tough economic climate.

In the United States, the January durable goods order report showed a disappointing start to the first quarter for business investment in the world’s largest economy. Meanwhile, the Conference Board’s index of US consumer confidence for February indicated a decline following three months of gains.

Overall, major new flows had little to no impact on the currency. Instead, the action among the majors remained defined by narrow margins. In the modest activity that has occurred over the last 24 hours, the dollar has regained some ground against the euro and pound.

Looking ahead to today’s economic calendar, the EC economic confidence index for February is the most notable release from the Eurozone. The diary in the United Kingdom is sparse. Across the Atlantic, the US events have second readings of Q4 GDP and core PCE inflation.

The quiet start to the week continues into Tuesday, as there is little market moving economic data to be released today.

The only piece of data being released today is across the pond with the US, where they will release their Durable Goods data which is forecasted to decline to 4.5%, followed by the Consumer Confidence Index which is expected to come in at 115.

One thing that may be of interest is the G20 meeting, which is an informal meeting between the worlds 20 largest economies in which they discuss the ongoing economic issues around the world.

Later this week the attention shifts to the EUs Consumer Price Index flash estimates, where markets are looking to see how inflation is fairing in the Eurozone. It is expected that inflation will fall slightly to 2.5% (from 2.8%).

For the UK the only data release of any significance is the Purchasing Managers Index, where it is projected to show expansion to 47.1. However, this is still below the 50-point growth mark.



On the currency front the pound has stabled near the highs of last week with only a small sell off, with the limited data coming from the UK this week this isn’t expected to change too much. There is a similar stance on the pound to dollar rate as well.

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.