Written by Steven Dooley, Head of Market Insights, and Shier Lee Lim, Lead FX and Macro Strategist
Greenback stronger after manufacturing numbers
The US dollar was stronger over the long weekend with a key inflation measure showing price pressures have not totally receded while a hot manufacturing reading signalled the US economy remains strong.
On Friday, the all-important US personal consumption and expenditure figures (PCE) – the Federal Reserve’s preferred measure of inflation – cooled in February and showed inflation remains broadly in line with the Fed’s projections.
The headline month-on-month read fell from 0.4% in January to 0.3% in February (below forecasts for 0.4%) with the annual number rising from 2.4% in January to 2.5% in February (in line with expectations). Most other components were in line with expectations.
Overnight, the US’s manufacturing PMI came in well above expectations, helping the US dollar higher.
Speaking at the San Francisco Fed’s Macroeconomics and Monetary Policy Conference on Friday, Fed chair Jerome Powell said the Fed expects inflation to remain on a “sometimes bumpy path.” Powell also said on Friday that Fed is in “no hurry” to cut rates.
With the USD index up 3.7% year-to-date, further gains remain possible.
Aussie at one-month lows, kiwi at four-month lows
The US dollar’s strength dominated markets with the AUD/USD hitting one-low and the NZD/USD hitting four-month lows.
Earlier, the Australian dollar was helped by a pick-up in commodity prices yesterday with Asian trading boosted by Chinese manufacturing and services activity data that beat expectations over the weekend.
In other markets, the EUR/USD and GBP/USD remained near one-month lows while the USD/JPY was steady near 34-year highs.
US jobs to be this week’s highlight
Looking to the week ahead, Friday’s US non-farm employment will be the highlight as this series continues to beat expectations – the key monthly jobs report has beaten forecasts for four consecutive months.
The US jobs market has defied expectations of a more significant slowdown but other related indicators, for example the Indeed openings series, have seen a shift in momentum.
Away from the US, the Reserve Bank of Australia minutes are released today, Eurozone inflation is due on Wednesday and Canadian employment numbers are released on Friday.
US dollar index hits four-month highs
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 1 – 5 April
All times AEDT
*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
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