Kantox currency update: strong US data keeps dollar on firm footing

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The US dollar appreciated again on Tuesday, extending its recovery from last week lows, on the back of better than expected services activity and home sales data that confirmed the resiliency of US economy.

The euro retreated to two-week lows weighed by investors’ expectations that the ECB will strike a dovish tone after Thursday’s monetary policy meeting, while the pound remains weak, as earlier hopes about May’s possibilities to obtain a better Brexit agreement start to wane.

 EUR/USD two-week lows below 1.1300. The euro dropped again on Tuesday, against a stronger dollar after the release of US macroeconomic figures to extend its reversal from 1.1400 highs last week to levels right below 1.1300. As at the London market opening times, the EUR/USD is trading at 1.1300.

GBP/USD drops further and reaches 1.3100. The pound extended losses on Tuesday, as the market grows more sceptical about the chances of avoiding a hard Brexit, which has pushed the pair to one-week lows at 1.3100. As at London market opening times, the GBP/USD is trading at 1.3135.

 USD/JPY stalled below 112.00. The US dollar failed again to break above 1.1200 resistance area and remained trading practically flat at two-month highs above 111.70. As at London market opening times, the USD/JPY is trading at 111.85.

 

In the Calendar Today

 Today, we will have few events of note in the calendar. The most interesting one will be the US, February’s ADP employment report, an advance of Friday’s Non-Farm Payrolls report that, in absence of more relevant indicators, might have a near-term impact on the US dollar.

Later on, the Bank of Canada’s monetary policy decision. Like the rest of the major central banks, the BoJ turned dovish in January with macroeconomic data showing signs of deterioration. In this context, the market will be attentive to the tone of Governor Poloz’s speech, which is likely to have some impact on CAD volatility.

13:15   GMT      US: ADP Employment Report (Feb)
Prev: 213K         Cons: 189K

15:00   GMT      BOC: Interest Rate Decision
Prev: 1.75%        Cons: 1.75%

 



Kantox currency update: strong US data keeps dollar on firm footing