The US Dollar struggles to find demand early Wednesday following Tuesday’s modest rebound. Upbeat macroeconomic data releases from China seem to be helping the market mood improve but investors refrain from committing to large positions ahead of German inflation data and the ISM’s February Manufacturing PMI mid-week.
ISM Manufacturing PMI February Preview: Gloom persists despite US expanding economy.
The Conference Board announced on Tuesday that the Consumer Confidence Index declined to 102.9 in February from 106.0 in January. More importantly, the one-year consumer inflation rate expectation component of the survey dropped to 6.3% from 6.7% in January. With the initial reaction to these prints, the US Dollar found it difficult to gather strength against its rivals. With Wall Street’s main indexes turning south and erasing the opening gains later in the session, the US Dollar Index managed to close the day modestly higher.
In the early Asian session on Wednesday, the data from China revealed that the NBS Manufacturing PMI rose to 52.6 in February from 50.1 in January. Additionally, the Non-Manufacturing PMI improved to 56.3 in the same period from 54.4. Both of these reading surpassed analysts’ estimates. In turn, the Shanghai Composite Index gains 1% on Wednesday and Hong Kong’s Hang Seng Index is up nearly 4%. Meanwhile, US stock index futures are trading modestly higher on the day.
After Australian Bureau of Statistics reported that the Gross Domestic Product grew at an annualized rate of 2.7% in the fourth quarter, compared to 5.9% in the third quarter, AUD/USD lost its traction in the Asian trading hours. Moreover, the annual Consumer Price Index dropped to 7.4% in January from 8.4%. Nevertheless, upbeat Chinese data helped the pair reversed its direction. At the time of press, AUD/USD was up 0.5% on the day at 0.6760.
Stronger-than-expected inflation readings from France and Spain provided a boost to the Euro during the European trading hours on Tuesday. EUR/USD, however, lost its traction and closed the day modestly lower before reclaiming 1.0600 early Wednesday. Annual CPI in Germany is forecast to edge lower to 8.5% in February from 8.7% in January.
GBP/USD climbed above 1.2100 on Tuesday but failed to preserve its bullish momentum in the second half of the day. Supported by the risk-positive market atmosphere early Wednesday, the pair trades in positive territory above 1.2050.
USD/JPY extended its sideways grind and closed flat on Tuesday. The pair continues to fluctuate in a narrow band above 136.00 in the European morning on Wednesday.
Gold capitalized on the robust Chinese data and extended its recovery on Wednesday. XAU/USD stays in positive territory above $1,830. The benchmark 10-year US Treasury bond yield stays quiet near 3.95%.
Statistics Canada reported on Tuesday that the Canadian economy stagnated in the fourth quarter with the real GDP (YoY) coming in at 0% and missing the market expectation for an expansion of 1.5% by a wide margin. USD/CAD gained traction after the disappointing GDP data and registered its highest daily close since early January above 1.3600. The pair stages a technical correction early Wednesday but manages to hold near 1.3600.
Bitcoin edged lower on Tuesday but regained its traction early Wednesday. At the time of press, BTC/USD was up more than 2% on the day at $23,700. After having declined to the $1,600 area on Tuesday, Ethereum turned north and was last seen rising 3% on the day at $1,650.