Home Daily Commentaries USD inches lower ahead of inflation data

USD inches lower ahead of inflation data

Daily Currency Update

The US dollar inched lower against its major counterparts, with the US Dollar Index (DXY) trading down 0.15% to 103.801. This came ahead of this week’s inflation reading. The Personal Consumption Expenditure (PCE) price index is set to be released on Thursday. In data news, New Home Sales for January were reported to be up 1.5%. This was still lower than the expected 680,000, reported at 661,000. The Approved Building permits for January came in at 1.489 million, down from the previous 1.493 million. Likewise, monthly building permits were down 0.3%, previously up 1.8% in December. Lastly, the Dallas Federal Reserve Manufacturing Index for February came in at -11.3. This was up from the previous reading of -27.4. This brought the Texas manufacturing sector near a healthier state after a weak January.

Key Movers

In Eurozone news, European Central Bank’s (ECB) Yannis Stournaras noted that the best time for rate cuts may be at the end of the first semester if inflation continues to cool and wage growth data is supportive. ECB President Christine Lagarde commented last week that wage growth data from the fourth quarter of 2023 was encouraging but not yet enough for inflation to be considered defeated.

The GBP/USD traded around the 1.2676 level this morning. The GBP rose against the USD as the Confederation of British Industry reported Realized Sales at -7. This was much better than the forecasted -33, showing more strength in the British economy.

The USD/CAD pair reached over 1.35 ahead of Thursday’s US Personal Consumption Expenditure (PCE) price index release. In data news, January’s preliminary Manufacturing sales month-over-month came in at 0.4%, well above the previous -0.7%. Conversely, January’s preliminary wholesale monthly sales numbers came in at -0.6%, below the previous reading of 0.3%. Oil was up 0.38% to 76.83 this morning, lending some strength to the commodity-linked Loonie.

Expected Ranges

  • EUR/USD: 1.08126 - 1.08597 ▲
  • GBP/USD: 1.26566 - 1.26993 ▲
  • AUD/USD: 0.65376 - 0.65668 ▼
  • USD/CAD: 1.34895 - 1.35286 ▲

Written by

Melanie Scott

OFXpert

Fascinated by the mechanisms that shape financial markets and their impact on currencies, Melanie is passionate about understanding how different factors shape market movements, and deciphering what these fluctuations signify for different currencies. As a Corporate Client Associate at OFX, she works closely with businesses across North America, offering them insights into foreign exchange strategies aimed at mitigating currency risks.