North American Summary and Highlights 27 February
Overview - The USD was stronger after Trump stated tariffs on Mexico and Canada would go ahead on March 4.
North American session
The USD advanced after Trump stated that tariffs on Canada and Mexico would go ahead on March 4, contradicting what he said on Wednesday. USD/CAD bounced to 1.4440 from 1.4365, but the USD gains were broad based, with AUD/USD losses to .6240 from 0.63 meaning AUD/CAD was lower. EUR/USD fell to 1.04 from 1.0480 with the EU continuing to attract hostile comments from Trump. The USD advanced versus GBP and CHF, but EUR/GBP near .8250 and EUR/CHF near .8360 were weaker. USD/JPY saw less movement, remaining firm but struggling to hold above 150.
Mixed USD data generated little reaction but included a sharp rise in initial claims to 242k from 220k, and an upward revision to Q4;’s core PCE price index to 2.7% from 2.5% despite GDP being unrevised at 2.3%. Durable goods orders rise by 3.1% on aircraft with ex transport orders unchanged, and pending home sales saw a second straight steep decline, by 4.6%.
European morning session
The USD was mostly little changed through the European morning, but gained ground against the JPY and CHF. USD/JPY rose around 60 pips to 149.90, and USD/CHF gained 20 pips to 0.8980, while EUR/USD was marginally firmer around 1.0480.
The FX moves suggest a mire risk positive market tone, but European equities were generally weaker while US futures were little changed. Data through the session was broadly in line with expectations. Spanish preliminary February CPI showed HICP unchanged at 2.9% y/y. Eurozone M3 was slightly weaker than expected at 3.8% y/y, but loans to households and businesses were both stronger on the month on a y/y basis. The European Commission business and consumer survey was marginally stronger in February than in January.