The US dollar begins the new quarter by looking around for a few hours, but eventually makes a significant move higher. Is Q1 about to repeat itself?
In Japan it’s a new fiscal year and end of month / quarter adjustments are over. But perhaps these are not only flows moving the USD.
Perhaps there is a growing notion that the US economy is doing OK: it awakened from a winter nap and is ready to spring. Recent US figures have been improving, after a losing streak.
Let’s start with the important measures: inflation and employment, which are the Fed’s mandates. Inflation figures have been A-OK: both core CPI and the Fed’s favorite measure, the Core PCE Price Index, have ticked up in y/y measures. Recent jobless claims fell. Needless to say, a lot depends on the Non-Farm Payrolls on Friday. An indicator for jobs will come today from the ADP Non-Farm Payrolls.
Also other data are improving: new home sales and consumer confidence stand out. The picture is still not all rosy as manufacturing indicators look shaky: this includes the Chicago PMI as well as investment as seen via the durable goods orders. We will get more on manufacturing today with the ISM PMI.
Here are some of the recent movements:
- EUR/USD is trading around 1.0725, not too far from the lows of 1.0710 seen earlier in the week. The pair enjoyed good PMI figures, but this didn’t help too much.
- GBP/USD received an OK manufacturing PMI but deteriorated quite quickly under 1.48.
- USD/JPY moved up and settles well above 120.
- AUD/USD is below 0.76 once again, hit by not so convincing Chinese data. The RBA is set to cut next week as the AUD/USD H&S pattern weighs.
- USD/CAD is around 1.27. Despite problems with the talks regarding Iran, the oversupply in oil continues weighing on the C$.
- NZD/USD is under 0.74. This currency stood up quite well, but it also surrenders to the dollar’s strength.
More:
- EUR/USD to parity by Q3 and to 0.95 by end Q1 2016 – Barclays
- Despite Volatility, EUR/USD Shorts Still Attractive– Goldman Sachs
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