Dollar gains broadly on upbeat U.S. data: Mar 2, 2015

Market Review - 28/02/2015 02:59GMT

Dollar gains broadly on upbeat U.S. data

The greenback rose against majority of its peers on Friday as the release of upbeat U.S. data increased speculation that the Federal Reserve will raise rates sooner rather than later.

U.S. GDP Q4 n GDP deflator Q4 came in better-than-expected at 2.2% n 0.1% vs forecasts of 2.1% n 0.0% respectively.

The single currency traded with a firm bias in Asia and gained to 1.1245 in European morning, then marginally higher to 1.1245 in New York morning on the release of upbeat German inflation. However, renewed selling after the release of upbeat U.S. GDP data emerged and price fell to session low at 1.1176. Euro briefly recovered to 1.1227 before retreating again in New York afternoon.

Germany CPI M/M n Y/Y came in better-than-expected at 0.9% n 0.1% vs forecasts of 0.7% n -0.2% respectively.

Versus the Japanese yen, although the greenback retreated to session low at 119.12 in Asian morning, price pared its losses and gained to 119.45 in European morning. Intra-day ascent accelerated after the release of U.S. GDP and dollar rose to an intra-day high at 119.80 in New York afternoon.

The British pound also traded with a firm bias in Asia and gained to 1.5449 ahead of European open before falling briefly to session low at 1.5384 in European morning. However, cable pared its losses and rebounded to 1.5449 in New York morning, then higher to 1.5459, due partly to cross-buying of sterling vs euro.

In other news, Fed's Dudley said 'risks of lifting Fed funds rate fm 0 early is higher than risks of raising late; inflation projected to stay below 2% objective for some time; mkt-based measures of inflation compensation are currently depressed; simple monetary policy rules come with a significant shortcoming; very much premature to accept hypothesis that U.S. has entered sustained period of secular stagnation.'

On the data front, U.S. Chicago PMI came in at its lowest lvl since Jul 2009 at 45.8 vs forecast of 58.0.

Data to be released this week:

New Zealand imports, exports, trade balance, Australia new home sales, business inventories, Japan manufacturing PMI, China HSBC manufacturing PMI, Swiss manufacturing PMI, Italy manufacturing PMI, unemployment rate, France manufacturing PMI, Germany manufacturing PMI, EU manufacturing PMI, unemployment rate, UK manufacturing PMI, mortgage approvals, Canada current account, U.S. PCE, personal income, personal consumption, ISM manufacturing PMI and construction spending on Monday.

Australia building approvals, RBA rate decision, Swiss GDP, Germany retail sales, UK construction PMI, EU producer prices, Canada GDP, producer prices, U.S. redbook retail sales and ISM New York index on Tuesday.

Australia GDP, China HSBC services PMI, Italy services PMI, France services PMI, Germany services PMI, EU services PMI, retail sales, UK services PMI, Canada BoC rate decision, U.S. ADP employment and Fed beige book on Wednesday.

Australia exports, imports, trade balance, retail sales, France unemployment rate, Germany industrial orders, Italy GDP, UK BoE rate decision, EU ECB rate decision, Canada Ivey PMI and U.S. jobless claims and factory orders on Thursday.

Japan leading indicator, Germany industrial output, France exports, imports, budget balance, Swiss CPI, Italy producer prices, EU GDP, Canada building permits, exports, imports, trade balance, U.S. non-farm payrolls, private payrolls, average earnings, unemployment rate and international trade on Friday.