Analysts at Westpac explained that US equities headed for a third straight daily decline, as markets remained focused on trade tensions and soft Feb retail sales data prompted economists to cut Q1 GDP estimates.
Key Quotes:
"US retail sales fell 0.1% in February, the third consecutive decline and well shy of expectations for a 0.3% gain. The underlying detail showed relatively broad-based weakness too, though Jan was revised to show a slightly less weak 0.1% fall, from -0.3%. The retail control group, a subset used for GDP calculations, rose a mediocre 0.1% (0.4% expected), after a flat Jan outcome, prompting widespread Q1 GDP downgrades. The widely watched Atlanta Fed GDP tracking model trimmed its Q1 projection to 1.9% annualised from 2.5%.
There was only a small dip in the US dollar and yields in response to the data, perhaps on the assumption that the Fed policymakers who meet next week will have already largely formed their opinions about the interest rate outlook.
EUR/USD slipped from 1.2413 to 1.2347 before steadying at 1.2375. A series of ECB officials, notably Draghi, reiterated the gradual path for policy and guidance, but also stressed the negative risks from trade tariffs and Draghi specifically stated that EUR strength would weigh on inflation.
USD/JPY slipped from 106.70 to 106.07 as US equities turned early gains into modest declines. GBP/USD was whippy at times but eventually flat, around 1.3970. USD/CAD consolidated Tuesday’s sharp rise driven by Bank of Canada comments but avoided 1.3000.
AUD/USD extended its gentle Sydney session rally in London trade to a high of 0.7917, its strongest point since 21 February, but was then pulled back to 0.7870/80 by weaker US stocks. The Aussie’s strength is a little surprising given the deepening US-China trade tensions, but on the positive side, China’s Jan-Feb industrial production growth of 7.2%yr was well above expectations.
NZD/USD ranged sideways between 0.7320 and 0.7355. AUD/NZD bounced off 1.0710 in Sydney trade to around 1.0750 late NY.
The US 10yr treasury yield fell from 2.85% to 2.81% as risk appetite softened, while 2yr yields gyrated between 2.24% and 2.29% for little net change at 2.26%. Fed fund futures continued to price three more hikes by end-2018 and another hike in 2019."
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.