Bets on the potential timing of interest rate cuts by the Federal Reserve ruled the sentiment once again in the FX galaxy this week. However, investors seem to have already priced in the likelihood of a rate reduction at the June event. This, in turn, morphed into the resurgence of renewed selling interest around the Greenback along with some scepticism, prompting the USD Index (DXY) to recede to three-week lows in the sub-104.00 zone.
On February 26, the US docket will only see the release of New Home Sales for the month of January. Moving forward, Durable Goods Orders, the FHFA’s House Price Index and the Consumer Confidence gauged by the Conference Board are expected to be released on February 27, while another revision of the Q4 GDP Growth Rate and Advanced Trade Balance results is due on February 28. On the last day of the month, inflation tracked by the PCE will take centre stage, seconded by the usual weekly Initial Jobless Claims, Pending Home Sales, and Personal Income/Spending. On March 1, the final Manufacturing PMI is due, followed by the always relevant ISM Manufacturing PMI, Construction Spending, and the final Michigan Consumer Sentiment print. The USD Index (DXY) traded with a bearish bias throughout the week, breaking below the ley support of 104.00 to print new multi-week lows at the same time.
Looking at the euro calendar, GfK’s Consumer Confidence in Germany grabs all the attention on February 27. Additionally, the final Consumer Confidence and the Economic Sentiment in the euro region are due on February 28. On February 29, Germany will be in the spotlight with the releases of Retail Sales, the labour market report, and the preliminary Inflation Rate. Finally, the final Manufacturing PMI is due in Germany, and the Euroland seconded by the flash Inflation Rate and the Unemployment Rate in the bloc. EUR/USD extended its recovery and surpassed the 1.0800 barrier with certain conviction on the back of the fresh bearish tone in the Greenback.
Across the Channel, house prices tracked by Nationwide are due on February 29, along with Mortgage Approvals and Mortgage Lending figures. Closing the weekly docket, the final Manufacturing PMI is due on March 1. GBP/USD ended the week on a positive foot, approaching the key 1.2700 hurdle.
In Japan, the Inflation Rate is due on February 27, prior to the release of the final Coincident Index and Leading Economic Index on February 28. Later, weekly Foreign Bond Investment figures, flash Industrial Production, Retail Sales and Housing Starts are due on February 29, while the Unemployment Rate and the Consumer Confidence are expected on March 1. USD/JPY navigated in a choppy fashion, although it managed well to keep the trade in the upper end of the range around the 150.00 zone.
Down Under, the RBA’s Monthly CPI Indicator will be at the centre of the debate on February 28, seconded by Housing Credit, Retail Sales, and the final Judo Bank Manufacturing PMI on February 29. AUD/USD consolidated its rebound and advanced north of the 0.6500 milestone, an area coincident with the 200-day SMA.
In China, NBS will publish its Manufacturing PMI and Non Manufacturing PMI on March 1. USD/CNH regained some poise in the latter part of the week after bottoming out at three-week lows around 7.1800.
Anticipating Economic Perspectives: Voices on the Horizon
- ECB’s C. Lagarde speaks on February 26.
- Fed's R. Bostic, S. Collins and J. Williams speak on February 28 along with ECB’s McCaul.
- Fed's R. Bostic, A. Goolsbee and L. Mester will speak on February 29,
- Fed's J. Williams, R. Bostic and M. Daly are also due on March 1.
Central Banks: Upcoming Meetings to Shape Monetary Policies
- The Hungarian central bank (MNB) is expected to cut its policy rate by 100 bps to 9.00% on February 27.
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