Possible losses for the euro ahead
Philip McHugh February 28th 2018 - 2 minute read
- Eurozone inflation expected to slip
- Slowing US growth likely to pressure USD
- AUD may tumble on Manufacturing PMI figures
Eurozone inflation to dampen ECB rate hike hopes?
The euro could face some pressure later this morning, following the release of the Eurozone’s latest Consumer Price Index.
The index is expected to show that there was a dip in price pressures across the bloc in February, with the inflation rate forecast to have slipped from 1.3% to 1.2%.
Given Germany’s lower-than-expected CPI reading yesterday there also remains the risk that inflation could have fallen even further than this.
With the European Central Bank (ECB) targeting an inflation rate of 2%, markets are likely to perceive a slide in inflation as denting the chances of the bank accelerating its monetary tightening any time in the foreseeable future.
US GDP figures likely to pressure USD
The US dollar may also find itself trending lower during Wednesday’s session as the US publishes its latest GDP estimate.
Economists forecast that the latest estimate will show that US economic growth will have slowed to 2.5% in the fourth quarter, down from 3.2% in the third quarter.
This would also be a slight revision from the initial estimate as well, which forecast that GDP would have only slowed to 2.6%.
The previous reading indicated that slowing trade activity was the largest drag on growth in the last three months of 2018, which offset strong consumer spending.
The dip could also adversely impact forecasts for growth in 2018 as well if analysts feel that any negative factors affecting growth have persisted.
Dip in factory activity may weaken AUD
Markets are bracing for a possible dip in the Australian dollar later this evening with the release of the domestic manufacturing PMI.
Analysts suggest that after climbing to a five month high in January, activity in Australia’s manufacturing sector will have slowed this month, with the index expected to fall from 58.7 to 57.
However this would still see the factory sector enjoying its seventeenth consecutive month of expansion, and should the outlook remain upbeat then any downward pressure on the ‘Aussie’ may prove to be negligible.
Upcoming Data
Wednesday, 28 February, 2018
10:00 EUR Eurozone Inflation
13:30 USD GDP Q4
22:30 AUD Manufacturing PMI
Written by
Philip McHugh