Forex Market Commentary
The Euro weakened further on Monday, closing at 1.1205(-18 pips) against the greenback. The EUR/USD pair finishes Monday at daily lows around 1.1198, as the dollar gathered momentum in the last trading session of the day compliments to better-than-expected US data, in opposition to EU one that missed the market’s forecast. The good mood prevailed, with equities up throughout the day on the back of encouraging Chinese data released during the weekend, and rising US Treasury yields, but for the shared currency, more signs of economic slowdown weighed more. According to the official releases, EU March preliminary inflation was slightly below expected, up by 1.4% YoY in the month vs. 1.5% previously. Core CPI printed 0.8%, missing the market’s forecast of 0.9% and below the previous 1.0%. Also, the final versions of the Markit Manufacturing PMI for the same month suffered downward revisions, with the German index down to 44.1, its lowest since mid-2012. For the whole EU, the manufacturing index was downwardly revised to 47.5. The pair retreated to the 1.1230 price zone, where it consolidated ahead of US data. The US Markit Manufacturing PMI suffered a strong downward revision, from 52.6 to 50.5, but the official ISM index surged to 55.3 surpassing the expected 54.5 and above the previous 54.2. Also, Construction Spending rose by 1.0% in February, surpassing the market’s expectations. Dollar’s rally, however, was contained by poor February Retail Sales, which unexpectedly fell by 0.2% MoM. This Tuesday, it will be the turn for the EU to release February PPI at 20:00 AEDT, seen up by 0.1% MoM and by 3.1% YoY, although following CPI numbers the impact it could have will be even lower than usual. The US, on the other hand, will release Durable Goods Orders for February, seen falling by 1.8% after January reading was downwardly revised 0.3%. Nondefense Capital Goods Orders ex Aircraft are expected flat after a 0.8% advance in the previous month.