North American Summary and Highlights 22 Feb
Overview - The USD saw some slippage after firmer European PMI data but recovered after a fall in US jobless claims.
North American session
The USD made general gains through the North American session, benefitting from lower than expected jobless claims data in the latest week, at 201k from 203k, which is more significant than usual as it is the survey week for the employment report. EUR/USD lost around 40 pips to 1.0820, and USD/JPY advanced 40 pips to 150.60. There were similar gains across the board, although GBP slightly outperformed, with EUR/GBP dropping 20 pips to 0.8550.
S and P PMI data showed manufacturing up to 51.7 from 50.7 but services slipping to 51.3 from 52.5. A 3.1% rise in existing home sales to 4.00m was slightly stronger than expected. Fed’s Jefferson warned against excessive easing, a message backed by Harker late in the session.
European morning session
The USD continued to lose ground against the riskier currencies through the European morning, helped by further rises in UK and EZ PMI, although the USD was off its lows by the end of the session. EUR/USD hit a high of 1.0890 after the release of strong French PMI, but fell back as the German PMI came in weaker than expected. However, the Eurozone PMI was still stronger than expected, and EUR/USD finished the session up around 20 pips at 1.0860. EZ composite PMI rise a point to 48.9, beating the 48.5 consensus.
GBP/USD made slightly larger gains through the session, rising 30 pips to 1.2680 after hitting a high of 1.2709. GBP/USD gains saw a similar pattern to the EUR move, but held up better after the German data, although GBP/USD did fall slightly after the UK PMI even though this was on the strong side of expectations. UK composite PMI was up 0.4 to 53.3, which was also 0.4 above the 52.9 consensus.
The USD was also weaker against the commodity currencies, which gained ground early in the session before the PMI releases, helped by the continued risk positive tone in equity markets, with European equity indices making new post-2000 highs. AUD and CAD were both around 0.3% higher on the session. USD/JPY and USD/CHF were both little changed, ensuring new multiyear highs in GBP/JPY, AUD/JPY and CAD/JPY.