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USD's USP

USD

It was not a winning day for the dollar but the USD came out of it quite well. The USP, once again, was the superiority of the US economic data, this time the services sector purchasing managers' index readings. Markit's version slightly missed the mark, scoring a 56.0 where 56.2 had been forecast, but it was still almost two points higher on the month. The ISM measure at 59.7 was a total success, three points up from January's reading and more than two points ahead of forecast.

New home sales looked good too. They increased by 3.7% in December. The only slight cloud was Redbook's retail sales measure. Sales fell 1.6% in the week to 2 March but they were still 4.2% higher on the year.

EUR

Having got a decent set of services PMIs under their belt yesterday the euro zone statisticians took a day off today. With the exception of the German construction PMI - it was four points higher in February at 54.7 - not a single Euroland statistic was to be had.  The EUR lost ground through lack of interest as much as anything. It is down by 0.2%.

This morning the OECD published its Interim Economic Outlook. It expects growth to slow across the board and notes that "Downward revisions from the previous Economic Outlook in November 2018 are particularly significant for the euro area, notably Germany and Italy". Pan-Euroland  growth is forecast to be 1.0% this year and 1.2% in 2020.

CAD

The Canadian dollar continued its steady retreat, losing another 0.2% to the USD on Tuesday. It has fallen almost 2% since the unfortunate GDP data came out on Friday. There were Canadian statistics to soften the blow.

Some ecostats are due today, with December's balance of trade, Q4 labor productivity and the Ivey purchasing managers' index. The main event will be the Bank of Canada's interest rate statement. No change is expected: the CAD's fortunes will hinge on the semantics and which way the BoC sees rates going next - if anywhere.

GBP

The pound got into a wobble on Tuesday morning, losing a cent to the USD before regaining it over the following four hours. There was no obvious catalyst: if anything, the stronger than expected services PMI ought to have sent it higher. Any number of factors could have contributed to the downward lurch: technical, political or the Bank of England governor's talk of no-deal Brexit preparations.  

Sterling is wobbling again today: the reason seems to be clear. The prime minister's delegation to Brussels has apparently been unable to win concessions that might help Theresa May to carry the day when her Brexit bill goes to the House of Commons next Tuesday. Negotiations are still going on but neither side exudes confidence. The GBP is 0.3% lower against the USD.

JPY

Another aimless day left the JPY 0.1% higher against the USD.  

Bank of Japan board member Yutaka Harada made a press conference appearance this morning after meeting business leaders in Kofu. He indicated that the BoJ board is ready to act "immediately… if the economy worsens and loses momentum for achieving our [inflation] target". The JPY faded slightly after his comments.

USD Among the leaders after stronger services PMIs

USD Among the leaders after stronger services PMIs

EUR OPEC expects Euroland economy to slow further

EUR OPEC expects Euroland economy to slow further

CAD BoC expected to hold steady today

CAD BoC expected to hold steady today

GBP Brexit jitters reappear

GBP Brexit jitters reappear

JPY BoJ's Harada says bank ready to ease if necessary

JPY BoJ's Harada says bank ready to ease if necessary

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