North American Summary and Highlights 28 March
Overview - The USD lost ground as UST yields fell with equities after US data warned of inflationary risk.
North American session
US data fuelled inflationary fears, with a 0.4% rise in the February core PCE price index and an upward revision to 5-10 year Michigan CSI inflation expectations to 4.1% from 3.9%. Personal income with a 0.8% rise exceeded a 0.4% rise in spending but the Michigan CSI headline was revised down to 57.0 from 57.9. Equities saw a sharp decline, and UST yields fell, despite the inflationary warnings.
The USD slipped, USD/JPY moving below 150 from 150.80, and EUR/USD advancing to 1.0825 from a low of 1.0765, more than fully erasing European losses. EUR also advanced versus GBP and CHF, with GBP/USD and USD/CHF lacking clear direction, as did a marginally softer AUD/USD. USD/CAD was little changed near 1.4320, a dip to a low of 1.4277 after Trump described a conversation with Canadian PM Carney as productive being reversed. Trump later stated he would follow through with tariffs on Canada.
European morning session
The EUR fell back in the European morning as European data came out on the soft side. Provisional French and Spanish CPI for March were both below expectations at 0.9% and 2.2% y/y respectively on an HICP basis. German unemployment also showed economic weakness, rising 26k in March and taking the unemployment rate up to 6.3%. Italian business and consumer confidence also slipped lower, as did Eurozone services sentiment in the EU Commission survey. EUR/USD fell from opening levels just below 1.08 to 1.0775.
GBP performed well through the session following much stronger than expected UK February CPI, which showed a rise of 1.0% m/m against a consensus 0.3% drop, following a similarly strong 1.4% rise in January. EUR/GBP continued this week’s decline, dropping a further 15 pips to 0.8320.
Otherwise, the USD was mixed, with USD/JPY dropping to a low of 150.35 before recovering the opening levels near 150.70, AUD/USD edging up to 0.6295, and USD/CAD rising to 1.4330. EUR/SEK traded up 3 figures to 10.83, while EUR/CHF slipped 10 pips lower to 0.9505