Daily Update - 22nd Feb 2017
The dollar's dominance was seen despite softer U.S. data and a retreat in U.S. yields. Manufacturing and service sector activity slowed in the month of February according to Markit Economics, which pushed their Composite index down to 54.3 from 55.8 in February. Furthermore Dollar continued its momentum on Fed’s Harker’s comments which he said that he sees 3 rate hikes in 2017. The 10 year Treasury yield rose over 4bp before retreating from its highs but none of this mattered as investors focused on last week's important data surprises and optimism from Fed Chair Janet Yellen. This resulted in EUR/AED sliding to 3.87 while GBP/AED dropping to 4.565. Strong data coming from the Euro Zone halted the decline, but it was not enough to trigger a decent bounce as it accelerated its decline with London market opening. UK inflation hearings were not so kind to the pound given Carney explained that there had been no uptick in inflation. Later on Brexit law passed its House of Lords 2nd reading without vote and the bill now goes for consideration to its 'committee stage' on February 27. This implies that the UK PM May could trigger the Article 50 by March 31. Early morning RBA Governor Philip Lowe is to speak at an event in Sydney. Later on, Germany is to release the IFO Institute is to report on German business climate. The UK is to release revised figures on fourth quarter growth. Canada will publish data on retail sales. The U.S. is to release industry data on existing home sales and later the Fed is to publish the minutes of its February policy meeting. It would be interesting to see whether Today’s FOMC minutes will give the dollar the kick it needs to propel higher. Markets expect Fed’s to raise interest rates, but the tone of the last FOMC statement was more cautious than Janet Yellen's semi-annual testimony so the minutes could provide a nudge but not necessarily the swift kick upwards for Dollar.Yesterday’s Markets
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