Concerns surrounding trade and the safety of the AstraZeneca vaccine hit the Pound yesterday morning causing a sharp drop to just above the 1.3800 level against the Dollar and 1.1575 against the Euro. Position adjustment ahead of Thursday’s Bank of England policy decision also held Sterling back although markets are expecting a cautiously optimistic stance from the Bank. The Pound did experience buying when the price dipped, especially against the Euro. The European Medicines Agency stated that vaccine benefits outweigh risks, which helped the Pound some uncertainty continued with the full report due on Thursday. The Euro slipped to near 1.1670 while the Pound recovered to near 1.3900 to the Dollar.
The Pound is above 1.3900 to the Dollar this morning but has met resistance preventing imminent further progress. The Euro has slipped to near 1.1682. The main focus is still tomorrow’s Bank of England meeting.
US retail sales declined 3.0% for February and notably weaker than consensus forecasts of a 0.5% decline, although the January increase was revised higher to 7.6% from the original figure of 5.3%. Underlying sales declined 2.7% on the month after an 8.3% gain the previous month while there was a 3.5% decline in the control group following an 8.7% increase for January. The dollar dipped marginally in an immediate reaction to the data, but quickly recovered ground and showed positive gains. The upward revisions negated the headline data and there were strong expectations of a short-term boost to demand.
Industrial production declined 2.2% for February compared with consensus forecasts of a 0.3% gain and despite a surge in utilities output while manufacturing output declined 3.1%. The NAHB housing index declined slightly to 82 for March from 84 previously.
There was caution ahead of today’s Federal Reserve (Fed) policy meeting, especially with this seen as a key meeting for the Fed in terms of developments in the bond market which will also have a crucial impact on the dollar.
The Euro remains confined in a range, just above the 1.1900 mark against the Dollar through the Asian session whilst consolidating near four-day lows.
The single currency continues to be weighed down by concerns that the suspension of the COVID-19 vaccine in Europe will hinder economic recovery. Spain, Germany, France and Italy became the latest European countries to temporarily halt the Oxford/AstraZeneca coronavirus vaccine amid reports of possible serious side effects.
Data to watch
10:30 - USD - Crude Oil Inventories
14:00 - USD - FOMC Economic Projections
14:00 - USD - FOMC Statement
14:00 - USD - Federal Funds Rate
14:30 - USD - FOMC Press Conference
Posted in Daily Market News on Mar 17 2021