Daily Currency Update

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Economic activity in the manufacturing sector up

USD - United States Dollar

Economic activity in the manufacturing sector grew in February, with the overall economy notching a ninth consecutive month of growth, according to a regular survey of the nation’s supply executives. February’s PMI registered 60.8, an increase of 2.1 percentage points from the January reading of 58.7. This figure indicates expansion in the overall economy for the ninth month in a row.

When the Purchasing Manager’s Index beats expectations, as it did again, it’s good for the US dollar. The monthly report has been considered a leading indicator of economic health.

Key Movers

Some stability seems to have returned to currency markets overnight after a very volatile end to last week, which was driven by a global sell off in bonds. GBP dipped along with risk assets as market repositioning saw the dollar bought. Investors assessed the possibility of inflation returning to US markets on the back of US President Joe Biden's stimulus package passing through Congress. GBPUSD very briefly dipped below 1.39 on Friday. However, it has since regained some poise and is creeping back up to the 1.40 handle.

The Australian dollar has been rising quickly over the last few weeks showing no signs of easing despite a sharp fall on Thursday. The AUDUSD pair broke above 0.80 cent mark for the first time since February 2018 on Wednesday, following a strong rally in base metals, iron ore and oil prices. However, on Thursday the Aussie fell to a fresh three-week low of 0.7706, after a sharp rise in bond yields which set off a sell-off in global equites and knocked the Aussie off its three-year high. With the current upward strength in commodity prices the rally may not be over yet.

Expected Ranges

EUR/USD: 1.203 - 1.21 ▲

GBP/USD: 1.390 - 1.399 ▲

AUD/USD: 0.770 - 0.778 ▼

USD/CAD: 1.264 - 1.273 ▼