Overall, the majors headed higher during the Asian session, but gave up some of their gains during the European session. In addition, the market seems to have lost some of the strong momentum seen earlier in the day, despite the heavy economic release calendar. Ahead, the currency pairs are likely to be influenced by U.S. equity markets and any additional news regarding the Treasury’s plan.
The Euro (Eur/Usd) headed higher for most of the Asian session, but declined as the session came to a close. After the London open, the euro managed to find support, slightly below the neutral pivot point (1.3615), helped by the European equity markets. In the last days of trading, the euro formed two consecutive doji stars, showing the pair’s indecision.
The European PMI service shows that both the service and manufacturing side of the economy are still in a contraction phase. This is the tenth consecutive month when the two indexes have shown a read below the 50.0 level, which separates contraction from growth. The German service PMI was released at 41.7, showing the industry has contracted during the last sixth months, while the manufacturing index came at 32.4, slightly better than expected.
The Euro-area current account was released at -12.7B, much worse than analysts’ expectations. The previously released number, for the month of December, was revised lower, to -7.6B. The report shows that the Euro-area trade account still recorded a deficit in December, as exports dropped sharply
The Pound (Gbp/Usd) advanced more than 120 pips in the first few minutes of the Asian session. During the European session, the pound gained another 50 pips, and broke above the 100-day simple moving average for the first time since July of last year.
The U.K. Consumer Price Index moved higher in February, to 3.2%, from 3.0% one month earlier. Even though the CPI declined at a record pace last month, this month the inflation gauge rose. In addition, the Core CPI, which excludes volatile items, rose to 1.6% from 1.3% last month. To some extent, the CPI number does not justify the BoE’s concern of “undershooting” the inflation target.
The number of mortgages approved by the BBA rose by 28.2K, higher than analysts’ expectations. The previously released number, for the month of January, was revised higher, to 24.3K. In February, net mortgage lending rose by £3.9 billion, above the average of the previous six months.
The Aussie (Aud/Usd) is once again gaining ground tonight. However, the gains have been relatively modest, since the pair only managed to gain 20 pips. The aussie tried in the Asian session to break above TheLFB R1, but failed, and since then, the aussie has traded in a 40-pip range.
The Cad (Usd/Cad) traded within a 50-pip range during the overnight session. The pair struggled both in the Asian and European trading hours to break below the 1.2200 level, but failed. Around the same area, the cad bottomed in the last day of trading. Tonight was the ninth consecutive day in which the cad moved lower.
The Swissy (Usd/Chf) again showed volatility overnight, but the pair was unable to establish solid direction in the overnight market. Yesterday, the swissy failed to break below the 200-day simple moving average, and formed a large doji-star.
The Yen (Usd/Yen) advanced sharply in the Asian session, but struggled to move higher after the London open. The pair gained 130 pips during the Asian session, reaching TheLFB R2 (98.35), but failed to move from there on. In the last three days, the yen has gained 370 pips.