US fourth-quarter GDP was unrevised at 1.9% compared with expectations of an upward revision to 2.1% as a higher estimate for consumer spending was offset by a downward revision to government spending and investment.
The Chicago PMI index was notably stronger than expected with an increase to 57.4 for February from 50.3 with robust gains in employment and prices on the month. The latest consumer confidence reading was also stronger than expected with an increase to 15-year highs of 114.8 from 111.6 in January which underpinned confidence in the spending outlook.
The dollar was still unable to gain any support as the Euro broke above 1.0600 with choppy trading into the London fix. San Francisco Fed President Williams stated that a March rate increase was up for serious consideration given full employment and accelerating inflation which provided fresh dollar support. New York Fed President Dudley stated soon after, that the case for interest rate increase is now more compelling and that there had been a very large rise in household confidence together with very buoyant financial markets.
Dudley’s comments had a more substantial impact in boosting the US currency as futures markets indicated that the chances of a March rate increase were now well above 50%. The Euro retreated to test support near 1.0550 as the dollar gained strong support against all majors.
Weren’t Tariffs USD Negative? The Dollar proved sensitive to headlines regarding trade during the US overnight session. However, contrary to what many commentaries would have you believe, as the risk of tariffs escalated the Dollar rose. The 90-day pause following Trump’s April ‘liberation day’ tariffs had been set to expire this coming Wednesday. To the […]
Dollar Reserves With the passing of Trump’s original deadline for the reimposition of liberation day tariffs yesterday, markets have breathed a sigh of relief. July VIX futures continued to slide lower. Moreover, what may surprise anyone who had been expecting the issue of tariffs to resurface following the passing of Trump’s new deadline, so too […]
Big Girls Don’t Cry A bond market tantrum and one of the sharpest one day sell offs in Sterling for several years appear to have been catalysed by the Chancellor’s appearance in PMQs yesterday. First: the back story. This Labour government has faced some embarrassment in recent weeks trying to get its welfare bill through […]