Here is what you need to know on Monday, February 24th:
- The American dollar edged lower at the end of the week, amid dismal US data triggering profit-taking. Business output contracted in the country for the first time since 2013. The greenback’s bullish trend remains in place, as the movements seem corrective.
- Coronavirus possible effects on global economic growth kept the mood depressed. Global equities closed in the red, while the yield on the benchmark US 30-year Treasury note fell to a record low of 1.89%. Fears of a recession hit Japan and the US.
- The EUR/USD pair has finished the week around 1.0850, the 23.6% retracement of its latest daily slump. The advance seems corrective, and chances of additional gains are limited.
- The GBP/USD pair bounced from a fresh yearly low, remains sub-1.30. UK manufacturing output unexpectedly soared. The EU and the UK set to start trade talks in March, Brexit to return to the spotlight.
- The Aussie remains among the weakest, as the Australian economy is being hit by Chinese jitters.
- The Japanese yen recovered just modestly after collapsing in the previous days, amid fears of a technical recession in Japan.
- Gold prices soared, with spot reaching a fresh multi-year high of $1,649,21 a troy ounce.
- Crude oil prices edged higher for a second consecutive week but closed Friday in the red. Saudi Arabia is weighing a break-up of the oil production alliance with Russia amid disagreements over the coronavirus outbreak's potential impact on the global oil demand.
- Cryptocurrencies advanced on Sunday, poised to extend gains this week.
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EUR/USD treads water just above 1.0400 post-US data
Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Geopolitics back on the radar
Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
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