North American Summary and Highlights 28 February

North American session

US core PCE prices were as expected with a moderate 0.3% increase. There were some surprises in the other US releases, a 0.2% fall in consumer spending but a 0.9% rise in personal income, and a massive jump in the advance goods trade deficit to $153.3bn from $122.1bn as imports surged ahead of threatened tariffs. There was little immediate reaction to the US data, though the trade and spending data turned the Atlanta Fed’Q1 GDP estimate negative. A stronger than expected 2.6% annualized increase in Q4 Canadian GDP saw USD/CAD slipping to test 1.44, a move that was not sustained.  

The USD later advanced as a meeting between Trump and Ukraine’s Zelenskiy turned into a confrontation, with the exception of a relatively stable USD/JPY. EUR/USD led the way, falling well below 1.04. AUD/USD fell below .62 and USD/CAD moved above 1.4450.  

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 35 pips to 150.35, reaching a high of 150.69 mid-session, while USD/CHF gained 30 pips to 0.9028. EUR/USD was marginally firmer around 1.0400. This activity was all very similar to that seen on Thursday, suggesting this may be end of month flow related.  

The SEK made gains early in the session, with EUR/SEK dropping from 11.20 to a low of 11.16 after a much stronger than expected revision to Q4 GDP data which showed a rise of 0.8% q/q against an original print of 0.2%. However, by the end of the morning EUR/SEK was back at 11.19.  

The other main data was provisional CPI data from France, Germany and Italy, The French data was clearly weaker than expected, with a flat month on an HICP basis against a market expectation of 0.3% gains. German state and Italian CPI were more in line with consensus.