By Denys Peleshok, Head of Asia at CPT Markets
Today, the dollar index has slightly declined after a rebound from its recent lows, partially offsetting part of the dollar’s losses from last month. The dollar could see less pressure as market expectations of a rate cut in March declined slightly while investors await new economic data. This sentiment was further influenced by the release of the Fed’s minutes. Additionally, a relative stability in treasury yields over the last few days supported the dollar to a certain extent. Upcoming economic reports, especially PMIs and labor market data today and tomorrow, could affect expectations and the dollar’s trajectory.
The Euro experienced a slight uptick today after a decline in reaction to the dollar’s performance. However, difficult economic conditions in the Eurozone might constrain its progress. Today’s PMI data will offer more insights into the EU’s economic state, with Germany’s CPI also set to impact the Euro. Furthermore, tomorrow’s EU CPI data will highlight the path of inflation. The European Central Bank (ECB) may face mounting pressure to reduce rates earlier if economic indicators continue to deteriorate, further weakening the euro.
The British pound maintained its rebound, extending some gains against the dollar. The Bank of England’s (BoE) hawkish position has lent some support to the pound. Today’s PMI data could influence the currency as market attention shifts from high inflation to deteriorating economic conditions.