By the US dollar index – calculated by factoring in the exchange rates of six major world currencies – kicked off the week around 96.81 and observed thin conditions as US banks closed in observance of Presidents’Day.
Federal Reserve policymakers thought pausing on US interest rate hikes last month posed little risk and plenty of benefit, minutes from their Jan. 29-30 meeting showed Wednesday, giving them time to assess the effects of a global slowdown (Reuters).
In response to this, the index rallied from 96.35 to a high of 96.56.
Broadly speaking, though, the greenback concluded the week in negative territory, down 0.45%.
Meanwhile, in other currencies:
Brexit hopes and Waning greenback
The British pound staged a reasonably robust comeback last week, up 1.31% vs. its US counterpart.
Cable extended recovery gains Tuesday, eclipsing key figure 1.30 and reaching highs of 1.3073.
Aside from UK job’s data, which was largely overlooked, a combination of renewed Brexit hopes and a waning greenback were the main drivers behind the upsurge.
Wednesday saw the unit clock highs of 1.3109 on the back of encouraging headlines out of the United Kingdom, with UK PM May and EC President Juncker stating Brexit talks were constructive during their meet.
From a technical standpoint, however, the GBP/USD’S charts emphasize a bearish tone.
Daily supply at 1.3160-1.3097 is seen in play, which happens to envelope the round number 1.31, February’s opening level (H4) at 1.3108 and a H4 Quasimodo resistance at 1.3145.
Release of ECB minutes
Similarly, the single currency posted gains vs. the dollar (+0.35%), supported by a USD pullback from 97.00 (US dollar index).
The release of the ECB minutes provided the euro with little inspiration as the release noted market expectations on rates were in-line with the ECB’s guidance.
The technical side of things show weekly demand coming in at 1.1119-1.1295, which may entice buyers into the market this week, targeting long-standing weekly support/resistance at 1.1465.
Schedule of Main Economic News and Events
Last week, currency majors were traded in different directions.
The dollar index (#DX) is consolidating near monthly highs.
The United States have published ambiguous economic reports.
At the same time, the American currency was supported by the growth of the US government bonds yield.
Financial market participants continue to monitor US-China trade negotiations, as well as the situation concerning Brexit.
Michel Barnier, The European Union’s Brexit negotiator, supposes that the Brexit process can be delayed.
According to the plan, Britain should leave the EU on March 29, but Prime Minister of the UK, Theresa May, is trying to find some concessions on her latest Brexit deal in order find support among parliamentarians on the next voting.
In the upcoming trading week, we recommend paying attention to the following macroeconomic events.
Monday, February 25th
On Monday, the news feed will be calm.
Publication of important economic reports is not planned.
Tuesday, February 25th
On Tuesday, investors will assess economic reports from the US:
- Statistics on the real estate market at 15:30 (GMT+2:00);
- CB consumer confidence index at 17:00 (GMT+2:00).
We also recommend paying attention to the speech by the Fed Chairman.
Wednesday, February 27th
On Wednesday, the news feed will be full of events:
- ADP nonfarm employment change at 15:15 (GMT+2:00);
- Statistics on durable goods orders in the US at 15:30 (GMT+2:00);
- Inflation report in Canada at 15:30 (GMT+2:00);
- Pending home sales index in the US at 17:00 (GMT+2:00).
Thursday, February 28th
On Thursday, we expect China manufacturing PMI at 03:00 (GMT+2:00).
At 15:30 (GMT+2:00), a preliminary report on the US GDP will be published.
Friday, March 1st
On Friday, trading week will end with the publication of important economic releases:
- China Caixin manufacturing PMI at 03:45 (GMT+2:00);
- Germany manufacturing PMI at 10:55 (GMT+2:00);
- Report on the labor market in Germany at 10:55 (GMT+2:00);
- UK manufacturing PMI at 11:30 (GMT+2:00);
- Consumer price index in the Eurozone at 12:00 (GMT+2:00);
- Personal spending in the US at 15:30 (GMT+2:00);
- Canada GDP at 15:30 (GMT+2:00);
- ISM manufacturing PMI in the US at 17:00 (GMT+2:00);