Dollar Up On hawkish Fed
The Euro-zone PMI services index for March was revised up to a 4-month high but the single currency was unable to gain any support from the data with Ukraine fears still sapping underlying support. The EU Commission also announced fresh sanctions on Russia including an import ban on coal and a ban on Russian ships docking in the EU.
Across the pond, the dollar was holding a firmer tone amid the hawkish Fed rhetoric with Governor Brainard stating that the Fed’s balance sheet could be reduced at a more rapid pace than during the last tightening cycle, beginning in May. New York Fed President Williams also noted that the Fed could start running down its balance sheet as soon as May. Markets have interpreted these comments in a hawkish fashion which has seen the dollar continue to dominate.
In level terms, the firmer dollar tone over the last 24 hours is reflected in EUR/USD opening lower below the 1.09 mark. Cable (GBP/USD) has also fallen back to 1.3065 with the GBP/EUR benefiting from weaker euro sentiment to open just below the 1.20 area.
Datawise and looking ahead to today, the macro diary remains quiet with the main highlight being the release of the latest Fed meeting minutes.