USD maintains gains ahead of next week’s rate decision
Daily Currency Update
The US Dollar Index (DXY) was flat this morning after making gains of over 1% yesterday. The February Producer Price Index (PPI) data was released at higher-than-expected levels with the final demand rising to 0.6%, up from 0.3% in January. The advancing PPI numbers brought inflation worries back to the forefront in the run up to next Wednesday’s Federal Reserve announcement. Markets have already priced in an unchanged interest rate but have been looking at a possible rate cut in May. As recently as a month ago, there was as much as a 40% chance of that happening. Markets are now pricing in a 90% chance the rates will remain where they are even at the next announcement. The University of Michigan Consumer Sentiment data is set to be released this morning and is expected to remain stable at a reading of 76.9 for March.Key Movers
The euro held steady after losing ground against the USD yesterday. The inflation numbers in France released overnight proved to be the most impactful data point for the Eurozone. Prices in Europe’s second biggest economy were up 0.8% last month, in line with the consensus expectations. As a result, the Financial Times Stock Exchange (FTSE) was up, bolstering the euro further.The Canadian dollar stayed soft against the greenback this morning after losing over half a cent yesterday. The Canadian economy showed stronger-than-expected housing starts last month according to a Statistics Canada release this morning. The release showed an expected 253,500 housing starts compared to an expected 230,000 units. In oil news, West Texas Intermediate (WTI) crude oil was down from recent highs but held over $80 a barrel. After seeing WTI prices get over $82 yesterday, commodities sunk to start the Friday session.
Expected Ranges
- EUR/USD: 1.0873 - 1.0993 ▼
- GBP/USD: 1.2731 - 1.2845 ▼
- AUD/USD: 0.6553 - 0.6625 ▼
- USD/CAD: 1.3436 - 1.3549 ▲