Markets muted ahead of Eurozone PMI numbers

Currencies Direct March 24th 2014 - 2 minute read

The outcome of last week’s Federal Reserve meeting
continues to provide some support for the US dollar. Janet Yellen
pacified the markets that the Fed will continue trimming down
stimulus despite the bad weather hiccup to economic data. She
further explained that tapering should be complete in the latter
half of this year and also hinted at the possibility of an interest
rate hike as early as spring 2015. Furthermore, US factory
production numbers on Friday came in better than expected and was
the best reading for 6 months helping the dollar make steady gains
across the board.

In terms of economic data from the US, we have manufacturing PMI
numbers as markets await tomorrow’s consumer confidence figures.
Meanwhile, disappointing manufacturing data from China has also
provided strength to the Australian dollar. The current resilience
of the Australian dollar reflects its relatively limited
implications for near-term RBA monetary policy expectations, as
they look for stability in terms of interest rates and
currency.

The euro has dropped considerably since the Ukraine crisis took
over and currently stands at 1.3795 against the Greenback. Stock
index futures were also lower as leaders head to The Hague to
discuss the tensions in the Crimea region. Markets will now focus
on the next batch of inflation numbers from the continent. Mario
Draghi has tried to reassure the markets there is no risk of
deflation and that promising growth numbers are forecast for the
near future. For the near term, markets will focus on French and
German PMI data and Eurozone services to provide the currency
further direction.

With a fairly bland economic calendar last week, Sterling lost
some ground after the Fed released a hawkish statement to the
markets. Unlike the US, the Bank of England hasn’t provided any
indication as to when interest rates will rise. As markets remain
in limbo on the timing of the hike GBP/USD currently stands at 1.65
ahead of inflation numbers tomorrow.


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