Forex Today: US Dollar consolidates gains ahead of PMI, Euro awaits inflation data

Eren Sengezer FXStreet

Here is what you need to know on Friday, March 1:

The US Dollar (USD) outperformed its rivals on Thursday, with the USD Index (DXY) registering its highest daily close in over a week above 104.00. The DXY stays in a consolidation phase early Friday as focus shifts to ISM Manufacturing PMI for February. In the European session, Eurostat will release Harmonized Index of Consumer Price (HICP) for February. Several Federal Reserve (Fed) policymakers will be delivering speeches ahead of the weekend as well.

Eurozone Inflation Preview: Sticky core prices set to boost Euro.

Inflation in the US, as measured by the change in Personal Consumption Expenditures (PCE) Price Index, declined to 2.4% on a yearly basis in January, the US Bureau of Economic Analysis reported on Thursday. This reading followed the 2.6% increase recorded in December and came in line with the market expectation. On a monthly basis, the PCE Price Index rose 0.3% as forecast. The Core PCE Price Index, which excludes volatile food and energy prices, rose 2.8% on a yearly basis, matching analysts' estimate.

US Dollar price this week

The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the strongest against the New Zealand Dollar.

	USD	EUR	GBP	CAD	AUD	JPY	NZD	CHF
USD		0.09%	0.34%	0.46%	0.85%	-0.11%	1.50%	0.45%
EUR	-0.09%		0.25%	0.36%	0.76%	-0.20%	1.40%	0.35%
GBP	-0.34%	-0.25%		0.12%	0.51%	-0.45%	1.16%	0.11%
CAD	-0.46%	-0.37%	-0.12%		0.43%	-0.58%	1.05%	-0.01%
AUD	-0.87%	-0.76%	-0.50%	-0.38%		-0.96%	0.67%	-0.39%
JPY	0.11%	0.20%	0.49%	0.57%	0.94%		1.62%	0.55%
NZD	-1.53%	-1.42%	-1.17%	-1.06%	-0.67%	-1.63%		-1.06%
CHF	-0.45%	-0.35%	-0.11%	0.01%	0.41%	-0.56%	1.06%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).

The benchmark 10-year US Treasury bond yield retreated below 4.3% with the initial reaction to PCE inflation data and Wall Street's main indexes opened in positive territory, causing the USD to lose interest on Thursday. Souring market mood later in the American session and month-end flows, however, helped the currency regain its traction. Early Friday, the 10-year US yield stays flat at around 4.25% and US stock index futures trade modestly higher.

During the Asian trading hours, the data from China showed that the NBS Manufacturing PMI edged lower to 49.1 in February as expected, while the NBS Non-Manufacturing PMI and Caixin Manufacturing PMI improved to 51.4 and 50.9, respectively in the same period. AUD/USD staged a rebound in the Asian session and was last seen trading in positive territory slightly above 0.6500.

Australian Dollar consolidates amid a stable US Dollar, US Manufacturing PMI eyed.

After declining sharply on hawkish comments from Bank of Japan (BoJ) officials on Thursday, USD/JPY reversed its direction and climbed above 150.00 early Friday. The data from Japan showed that the Unemployment Rate ticked down to 2.4% in January from 2.5%.

Japanese Yen continues losing ground against USD amid divergent BoJ-Fed policy expectations.

EUR/USD lost 0.3% and registered its largest one-day decline since mid-February on Thursday. The pair, however, managed to stabilize above 1.0800 early Friday.

Despite the broad-based USD strength, Gold capitalized on retreating US yields and gathered bullish momentum, advancing to its highest level since early February at $2,050 on Thursday. XAU/USD stays in a consolidation phase slightly below this level in the European morning.

Gold price consolidates below one-month top, downside potential seems limited.

GBP/USD posted daily losses for the second straight day on Thursday. The pair stays below 1.2650 in the European morning on Friday.

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

AUD/USD challenges four-week highs beyond 0.7000

AUD/USD continues its march north, this time leaving behind the key 0.7000 hurdle and trading at shouting distance from multi-week tops. The persistent recovery in spot comes amid further losses in the Greenback amid extra improvement in the risk complex.

USD/JPY remains confined in a familiar range below 158.50

USD/JPY sees some dip-buying in the Asian session on Wednesday, though it remains confined within a multi-week range near 158.50 as the uncertainty over the timing of the next BoJ rate hike keeps Japanese Yen bulls on the defensive. Meanwhile, hawkish Fed expectations, bolstered by inflation risks stemming from volatile oil prices, underpin the US Dollar. However, looming intervention fears could limit JPY losses and cap the currency pair.

Gold advances modestly; targets $4,150

Gold prices manage to reverse three consecutive daily declines, trading just below the $4,150 mark per troy ounce on Wednesday. The precious metal’s recovery comes amid a slight drop in the US Dollar, mixed US Treasury yields across the board and a widespread cautious tone from the US-Iran front.

XRP and XLM regain momentum as derivatives activity picks up

Ripple and Stellar are regaining momentum on Wednesday, mirroring gains across major digital assets. XRP has climbed above $1.36, while XLM has reached $0.1854, reinforcing support levels recently tested. This gradual price increase comes amid sticky inflation in the United States and ahead of the Federal Reserve’s monetary decision next week.

What the midterm elections mean for Treasury yields, the Dollar and Gold

Democrats are priced to take the House, so November 3 comes down to the Senate and how much Washington can borrow without the other party. Treasury yields will show the answer first, then the Dollar and Gold. On November 3, Americans vote for all 435 House seats and 35 Senate seats. For bond prices, the result comes down to one thing: how much the government will borrow over the next two years.

The US Dollar fell. Gold didn't rally. That tells you everything

Gold (XAU/USD) is struggling to capitalize on a weaker US Dollar (USD), after repeatedly failing to establish itself above the $4,200 level. The precious metal remains confined to a relatively narrow trading range despite a combination of developments that would normally support higher prices.