Euro May Hold Up Ahead of ECB, US Dollar Seeking Lifeline
- Euro may shrug off retail PMI data as ECB rate decision looms large
- US Dollar may rise if Fed’s Dudley echoes Powell’s hawkish rhetoric
- Pound retracing prior gains, Yen and Canadian Dollar losses mount
The European data docket offers little that might inspire lasting fireworks in FX markets. February’s Eurozone Retail PMI surveys take top billing. The outcomes are unlikely to inspire a lasting response from the Euro regardless of what ultimately comes across the wires as investors await Thursday’s ECB policy announcement. Indeed, even the worrying Italian election outcome was conspicuously brushed aside.
Fed-speak enters the spotlight later in the day, with comments from Bill Dudley, President of the US central bank’s New York branch, due to cross the wires. He has been a solidly neutral voice on the rate-setting FOMC committee. If he echoes the recent hawkish turn in rhetoric from the previously anchored Jerome Powell – now that committee’s Chair – the US Dollar may find cause for rebound.
The British Pound corrected lower in relatively quiet Asia Pacific trade, seemingly retracing the prior day’s Brexit-inspired gains. The Japanese Yen continued to retreat as regional bourses followed Wall Street higher, sapping the appeal of the standby anti-risk currency. The Canadian Dollar also extended losses, finding no help in the suddenly sanguine view of US protectionist threats that apparently lifted share prices.
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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