Forex Today: Fedspeak and US PMI data eyed as choppiness continues

Here is what you need to know on Friday, March 3:

The choppy action in financial markets continue in the second half of the week as investors assess the latest central bank commentary and data releases. The US Dollar Index stays on the back foot early Friday following Thursday's rebound and the 10-year US T-bond yield retreats toward 4%. ISM will release the February US Services PMI report later in the day and several FOMC members, including Atlanta Fed President Raphael Bostic and Fed Governor Michelle Bowman, will be delivering speeches ahead of the weekend.

ISM Services PMI Preview: Strong figure set to catapult US Dollar to new highs.

The data published by the US Bureau of Labor Statistics revealed on Thursday that Unit Labor Costs rose by 3.2% in the fourth quarter. This reading came in much higher than the market expectation of 1.6% and provided a boost to US Treasury bond yields. In turn, the US Dollar continued to outperform its major rivals and Wall Street's main indexes turned south after the opening bell. In the second half of the American session, however, the improving risk mood limited the USD's upside and helped US stocks rebound. Bostic said late Thursday that he was in favor of a 25 bps rate hike at the next policy meeting and noted that they could be in a position to pause the current tightening cycle by mid to late summer.

US February ISM Services PMI Preview: Will it influence Fed rate hike bets?

During the Asian trading hours, the data from China revealed that the business activity in the service sector expanded at a more robust pace in February than expected with the Caixin Services PMI climbing to 55 from 52.9 in January. The Shanghai Composite Index is up more than 0.5% and Hong Kong's Hang Seng Index remains on track to post a daily gain of 1%. Nevertheless, US stock index futures trade mixed in the European morning.

Supported by the upbeat Chinese data, AUD/USD stays in positive territory slightly above 0.6750 and NZD/USD clings to modest daily gains above 0.6200.

EUR/USD failed to capitalize on stronger-than-expected inflation data for February on Thursday and closed the day in negative territory, erasing a large portion of the gains it recorded on Wednesday. The pair stays quiet early Friday and trades modestly higher on the day above 1.0600. European Central Bank (ECB) Vice-President Luis de Guindos will speak on monetary policy at 0900 GMT. Eurostat will release the Producer Price Index (PPI) data for January. 

GBP/USD suffered heavy losses and closed below 1.2000 on Thursday. The pair seems to have gone into a consolidation phase early Friday and was last seen trading near 1.1980. Former British Prime Minister Boris Johnson said on Thursday that the new Brexit deal for Northern Ireland was not about the UK taking back control and added that he will find it "very difficult" to vote for it.

USD/JPY snapped a three-day losing streak on Thursday but seems to be struggling to preserve its bullish momentum, trading near 136.50 early Friday.

Gold price benefited from the strong PMI data from China and extended its rebound during the Asian trading hours on Friday. XAU/USD was last seen trading above $1,840.

Bitcoin came under heavy bearish pressure early Friday and fell below $22,000 for the first time since mid-February before recovering modestly. At the time of press, BTC/USD was down nearly 5% on the day at $22,350. Following Thursday decline, Ethereum continues to push lower on Friday and was last seen trading at $1,560, where it was down 5.1% on the day.