US dollar remains stable following PCE data release

Key Movers

The euro remained above the USD$1.08 level due to US PCE figures, in line with expectations, influencing the USD. Additionally, lower-than-anticipated German inflation data created an opportunity for the European Central Bank (ECB) to possibly start rate cuts as early as June. The most recent report from Germany indicated a deceleration in headline inflation in February, dropping to 2.5%, below the market's anticipated 2.6% and marking the lowest level since mid-2021.

The pound maintained relative stability at USD$1.265, bolstered by positive signals from the Bank of England's (BoE) monetary indicators. In January, mortgage approvals saw a notable increase, reaching 55,200. This was the highest level since October 2022 and surpassed market expectations of 52,000. Furthermore, there was a larger-than-expected surge in consumer lending, with a net increase of £1.9 billion, surpassing forecasts that had predicted a rise of £1.6 billion. Investors are anticipating the BoE will implement the first rate cut in August, while concurrently discounting a similar move by the Federal Reserve and the ECB in June. The AUD dipped below USD$0.652, reaching its lowest levels in 2 weeks as investors responded to domestic inflation figures that fell short of expectations. Data revealed that Australia's monthly inflation Consumer Price Index (CPI) remained at a two-year low of 3.4% in January which was below the anticipated 3.6%. On the economic front, Australian monthly retail sales increased by 1.1% in January, falling short of the expected 1.5% gain.

Rebounding from the near three-month low, the Canadian dollar made up ground this morning, supported by robust Gross Domestic Product (GDP) data. In the fourth quarter of 2023, the Canadian GDP expanded by an annualized 1%, exceeding market expectations of 0.8%. Additionally, the contraction in the third quarter of last year was revised lower, and preliminary data for January indicated significant growth. These findings highlighted the resilience of the Canadian economy, granting the Bank of Canada (BoC) more time to assess the appropriate timing and extent of potential rate cuts throughout the year. These reports also showed the strength of the Loonie by emphasizing robust foreign demand for Canadian energy exports and facilitating the influx of foreign exchange into the country.