Manufacturers are optimistic for future
Thursday 18 February, 2021
Daily Currency UpdateUSD - United States DollarInflation was not a concern of the Federal Open Market Committee, according to the minutes released yesterday. While Wall Street and some policy makers have feared that the proposed federal stimulus package may overheat the economy, the Fed reiterated a position it taken for some time now. It will be “some time” before it winds down its assets purchases, and that inflation’s benefit outweighed the risk of not taking action to support the economy.In other news, a survey of Philadelphia manufacturers beat expectations. The Philadelphia Fed Business Outlook Survey, a leading indicator of economic health, and a survey of about 250 manufacturers, demonstrated that manufacturing in the region continued to grow.The US dollar was mixed in trading this morning. Demand was down against the euro and Great British pound. While demand for USD outpaced its Australian and Canadian counterparts.
Key MoversThe worst performing currency yesterday was the euro. Even though we saw improved numbers from the ZEW survey, there is concern ahead of tomorrow’s PMI reports. A lot of the major economies in the Eurozone are currently in full national lockdown, including Germany. Which is expected to remain in lockdown until March 7. The rate at which the Eurozone is vaccinating is also weighing heavily on the single currency.The pound traded lower yesterday due to mild improvements in inflation and renewed talks on negative interest rates. The Consumer Price Index fell to -0.2% for January achieving a rate of 0.7%, a far cry from the 2% target set by the Bank of England. Which is why negative interest rates are still being spoken about. Bank of England Deputy Governor Ramsden did comment that quantitative easing or bond buying is their favored route.The Australian dollar drifted lower through trade on Wednesday, depressed by weakness across equities and a slew of stronger than anticipated US macroeconomic data sets. Having given up 0.78 US cents, the AUD remained largely range bound through the domestic session bouncing between 0.7740 and 0.7770 before marking fresh daily and weekly lows at 0.7725 following a massive upward surprise in US retail sales. Having disappointed in December, US consumers turned out in January, marking a 5.1% uptick in spending; well above the 1% anticipated.
- EUR/USD: 1.203 - 1.208 ▼
- GBP/USD: 1.383 - 1.397 ▼
- AUD/USD: 0.773 - 0.778 ▲
- USD/CAD: 1.267 - 1.272 ▲