U.S. Dollar Mixed as Euro Stabilises at 4-Month High
The US dollar was mixed against its major trading partners early Monday — up versus the pound and Canadian dollar, down versus the euro and yen — as the focus turns to inflation data for February later in the week.
Analysts have maintained that the US dollar is fragile and would be hit by a soft number. However, FX markets are starting to settle down after a momentous week, ING says in a note.
Federal Reserve officials are in their ‘quiet period’ ahead of the March 18-19 Federal Open Market Committee meeting.
Away from US data this week, the focus will be on Ukraine peace talks in Saudi Arabia and the global trade war. Overnight, China went through with its retaliatory tariffs against US agricultural goods, and this Wednesday sees US tariffs go into effect on steel and aluminum imports.
Hanging over the market remains the threat of extensive ‘reciprocal’ US trade tariffs coming in next month as Washington seeks to level the playing field for trade, ING says.
A quick summary of foreign exchange activity heading into Monday showed that USDEUR rose to 1.0851 from 1.0849 at the Friday US close and 1.0843 at the same time Friday morning.
Eurozone investor confidence indicated less pessimism in March than in the previous month, according to the data released earlier Monday. The next European Central Bank meeting is scheduled for April 16-17.
GBPUSD fell to 1.2917 from 1.2928 at Friday US close but rose from 1.2810 at the same time Friday morning. There are no UK data on Monday’s schedule. The next Bank of England meeting is scheduled for March 20.
USDJPY fell to 146.9841 from 147.8502 at the Friday US close and 147.7001 at the same time Friday morning. Japanese wage income rose less than expected in January while the leading index rose only modestly in the same month and services business sentiment declined in February, according to data released overnight. The next Bank of Japan meeting is scheduled for March 18-19.
USDCAD rose to 1.4374 from 1.4368 at the Friday US close and 1.4336 at the same time Friday morning. There are no Canadian data on Monday’s schedule. The next Bank of Canada meeting is scheduled for Wednesday, when a 25 basis point rate reduction is expected.
The euro stabilized around $1.08, its strongest level since early November, as investors took a breather after last week’s surge driven by a pivotal shift in German fiscal policy.
The common currency rose by the most in 16 years in the first week of March after Germany’s major political parties unveiled plans to reform the country’s debt brake and establish a €500 billion infrastructure fund aimed at stimulating economic growth.
Additionally, European leaders agreed on Thursday to a substantial increase in defense spending to bolster the region’s defense industry and military capabilities.
On the monetary policy front, the European Central Bank implemented a widely expected 25-bps rate cut and acknowledged that policy is becoming less restrictive, hinting at a potential pause in further reductions. Traders currently anticipate one or two additional 25bps cuts later this year. # U.S. Dollar Mixed as Euro Stabilizes at 4-Month High Nigerian Exchange Falls by N73bn as Investors Dump VFD, OANDO
