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The Philly Fed Manufacturing Index dropped to -6.3. This is a huge disappointment, after the USD had a small breather. It was expected to tick lower from 9.4 to 9.2 points in the month of February. The report carries weight as it is an early indicator for the current month.

Before the release, EUR/USD traded at 1.3710, GBP/USD at 1.6670 and USD/JPY at 102.20. The US dollar is now retreating with the biggest impact seen in USD/JPY.

Beforehand, CPI and jobless claims came out exactly as expected, and little changed since the previous releases, thus hardly having an impact on currencies.

However, Markit’s Flash Manufacturing PMI posted a very positive surprise: 56.7 points: 3 more than in January and much higher than expected. This is the preliminary release, and not as important as the ISM manufacturing PMI, but nevertheless, an optimistic sign for the small manufacturing sector.

Despite some weak economic signs seen recently from the US, the taper train remains on track, and the FOMC meeting minutes affirmed that.