North American Summary and Highlights 7 Mar

North American session

The EUR gained ground through the North American session. Initially, EUR/USD dipped slightly following the ECB announcement of unchanged policy, with the statement initially seemingly interpreted as mildly dovish. But even though EUR front end yields stayed lower on the day, EUR/USD rebounded after the initial dip, gaining around 50 pips on the session to near 1.0950. 

The USD was also generally weaker elsewhere, except against the JPY, with USD/JPY rising around 30 pips after dipping below 148 in the European morning.  Fed’s Powell repeated his Wednesday testimony to Senate and stated in the Q+A that the Fed was not far from having the necessary confidence on inflation to ease, though Fed’s Mester in separate remarks sounded more cautious. Data showed unchanged initial claims at 217k but a wider than expected trade deficit for January.

European morning session

The AUD and JPY gained ground through the European morning, both gaining around 0.4% against the USD, while EUR/USD was fairly steady, edging slightly lower below 1.09. Indeed, the EUR was generally weaker, losing ground to GBP, CHF and scandis, most of which also made modest gains against the USD. USD/CAD was also slightly lower. JPY strength looks to have been a hangover from the more positive tone in Asia related to the evidence of rising Japanese wage pressure. 

EUR weakness may have been partly due to the weak German manufacturing orders data released early in the session, which showed a huge 11.3% drop in January. However, this followed an equally huge 12% rise in December, so isn’t really of great significance. The upcoming ECB meeting, and some fears of a softer ECB stance, may also be weighing on the EUR.