EUR/USD, GBP/USD And AUD/USD Drop, USD/JPY Rose Above 135.00
Aa
Share
The dollar index rose to seven-week highs on Friday as investors braced for an extended hold on higher US interest rates after a series of strong economic data in the US.
Investors await data on the US Personal Consumer Expenditure (PCE) Price Index.
The annual core PCE price index, the Fed's preferred measure of inflation, is projected to fall to 4.3% in January from 4.4% in December. The core consumer price index (CPI) fell to 5.6% y/y in January from 5.7% in December. A modest fall in core PCE inflation should not come as a big surprise at this point. The PCE Core Price Index is expected to increase by 0.4% m/m. In the event that the monthly value exceeds the market consensus, the US dollar may gain strength.
It is worth noting, however, that markets are already fully pricing in two more Fed rate hikes of 25 basis points in March and May.
USD/JPY
USD/JPY started the day with a decline towards 134.20. Then the yen pair moved upwards. USD/JPY hit 135.00 and is now trading at 135.3850
The Japanese yen may fall further after the new governor of the Bank of Japan, Kazuo Ueda, signaled that very loose monetary policy should be maintained. Ueda's comments after his approval in the lower house of Japan's parliament did not produce any clear hawkish signal that could fuel a resurgence of speculative demand for the yen in the near term.
EUR/USD
EUR/USD traded above 1.06 in the Asian session, mostly in the 1.0605-1.0610 range. In the European session, the EUR/USD pair lost momentum and returned to levels below 1.06. Currently, the pair is trading just below 1.06 at 1.0580.
The euro started the European session weaker after worse than expected data on German GDP.
GDP data showed that the German economy contracted (-0.4%) in the fourth quarter of 2022 and brought recession talk back.
Moreover, a weaker-than-expected rise in monthly core PCE inflation could trigger a USD correction and help the EUR/USD rebound ahead of the weekend.
Read next: Visa Success At The Expense Of Small Businesses| FXMAG.COM
GBP/USD
The cable pair in the Asian session and in the beginning of the European session traded around 1.2020. The GBP/USD pair lost momentum and fell below 1.20, at 1.1987.
British consumers have become more optimistic about their personal finances and economic outlook, but their sentiment is much lower than it was before the COVID-19 pandemic, research firm GfK said on Friday.
Improved consumer sentiment does not always translate to improved spending, as evidenced by the flat retail sales reading for February from the Confederation of British Industry on Thursday.
However, energy prices are finally backing down from last year's highs and the UK economy is not looking as bad as expected just a few weeks ago, according to this week's Purchasing Management Index (PMI) business activity survey that showed an unexpected rebound in early February.
AUD/USD
The pair of the Australian in the Asian session stayed above 0.6819, but with the start of the European session it began to fall below 0.68. Currently the Aussie Pair is trading below 0.6870
The Australian yen gained in value after the alleged head of Japan's central bank maintained the status quo on monetary policy and was apparently in no rush to end its massive stimulus programme..
Source: investing.com, finance.yahoo.com
