The dollar’s long decline against GBP over the past year bottomed out over the course of the past five weeks, but now there is evidence of further weakening. The picture against the euro remains mixed, as over the past week the greenback has fallen away from a four-month high.
However the picture is growing of a US economy moving ahead while the EU languishes. Yesterday’s data on Markit services and composite PMI was slightly above expectations, but the biggest news is that ISM non-manufacturing PMI was well above, at 63.7 against a forecast of around 60. This sent Wall Street into a frenzy and the S&P 500 and Dow Jones industrial average both closed at record highs.
The rest of the week is fairly quiet for data, although we have US balance of trade for February tomorrow. The US trade gap has been widening and US imports hit their highest since August 2019 last month – although a large component of that was pharmaceuticals. We also have minutes from the latest FOMC meeting in March, where we will hear more on the Fed’s plans to support the economy.
For more on currencies and currency risk management strategies, please get in touch with your Smart Currency Business trader on 020 7898 0500 or your Private Client trader on 020 7898 0541.
