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Unexpected Dovish Comment from Fed’s Powell Dents US Dollar Momentum

Pound News: Jitters Build Ahead of May’s Brexit Speech

While the UK manufacturing PMI showed a smaller loss of momentum on the month than forecast the underlying details of the survey still dented the Pound (GBP).

With signs still pointing towards increasing price pressures, and as January’s net consumer credit figure disappointed forecast, confidence in the UK economic outlook diminished.

GBP exchange rates are expected to see some significant volatility today as markets react to Prime Minister Theresa May’s latest speech on the subject of Brexit.


Euro News: Eurozone Unemployment Rate Improves

In a positive development for the Eurozone economy December’s unemployment rate was unexpectedly revised down from 8.7% to 8.6%.

Coupled with the solid nature of the latest raft of Eurozone manufacturing PMIs this gave the Euro (EUR) a fresh boost on Thursday.

As markets brace for the results of Sunday’s Italian election the appeal of the Euro is likely to diminish, with the threat of fresh political uncertainty hovering over the Eurozone.


US Dollar News: Powell Unexpectedly Dovish on US Wage Growth

As the ISM manufacturing index leapt to its highest level in nearly fourteen years US Dollar (USD) exchange rates were encouraged to extend their gains further.

However, some of the wind was knocked out of the US Dollar on Thursday afternoon as Fed Chair Jerome Powell made an unexpectedly dovish comment on the subject of wage growth.

Nevertheless, as hopes for a more aggressive pace of Federal Reserve monetary tightening persist the downside potential of the US Dollar is still expected to remain somewhat limited today.


Canadian Dollar News: Oil Falters as US Production Hits 47-Year Monthly High

The Canadian manufacturing sector continued to expand solidly in February, offering support to the Canadian Dollar (CAD).

Even so, demand for the commodity-correlated currency remained muted yesterday thanks to news that US crude production had risen to its highest monthly level in forty-seven years.

Further pressure could be in store for CAD exchange rates this afternoon if the latest Canadian gross domestic product data fails to show signs of improvement.


Australian Dollar News: AUD Rates Soften on Private Expenditure Contraction

An unexpected contraction in the fourth quarter private capital expenditure figure weighed heavily on the Australian Dollar (AUD) yesterday.

This weaker showing indicates that business confidence deteriorated at the end of 2017, suggesting that the economic outlook is weaker than previously thought.

Unless market risk appetite picks up significantly today AUD exchange rates are unlikely to find any particular rallying point.


Upcoming Data

Friday, 2 March

09:30    UK Construction PMI

10:00    Eurozone Producer Price Index

13:30    Canada Gross Domestic Product

15:00    US University of Michigan Sentiment Index


Alastair Archbold 

Currency Dealer

01442 892 066

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