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Mnuchin hints at preference for a weaker Dollar

Mnuchin hints at preference for a weaker Dollar

The Pound pushed steadily higher throughout yesterday reaching 1.1870 against the Euro by the evening. Sterling also pushed above 1.2500 against the Dollar with highs above 1.2550 as the currency gained some net support on valuation grounds.

UK CBI retail sales data strengthened to 9 for February from -8 the previous month. However, for the first time in over four years, retailers were expecting a decline in sales for the next three months, primarily due to the impact of rising costs.

There’s only UK BBA loans for home purchases today but next week’s PMI releases will be important for underlying sentiment on the economy.

Yesterday, the US Dollar drifted lower across the board after comments from the US Treasury Secretary Steve Mnuchin, who failed to provide any details of the proposed tax reforms, during an interview on CNBC. Continuous uncertainty over the timing for the implementation of Trump’s fiscal policies further diminished prospects of a rate-hike at the Federal Reserve’s (FED) upcoming meeting in March, against the backdrop of Wednesday’s less hawkish Fed meeting minutes.

Mnuchin also revealed that a strong Dollar reflected the confidence in the US and the outperformance of the US economy. He recognized that a strong Dollar is not an unalloyed benefit necessarily to the nation, and in both the short and long-term, there are drawbacks and advantages. A strong Dollar policy was meant as a signal to US trade partners and creditors that the US would no longer use the dollar as a weapon to aid concessions as was the case from 1985-1995. Until Mnuchin signals this element of the strong dollar policy, investors may not be completely comfortable with the US commitment.

Geman consumer confidence dipped slightly to 10.0 for February from 10.2 previously, maintaining some doubts over consumer spending trends. Bundesbank head Weidmann confirmed that he had voted against extending the ECB QE programme last December and also stated that inflation forecasts would probably need to be revised higher.

The French Presidential election as markets considered that centrist Macron’s position had strengthened and the Green Party candidate also announced that he would withdraw from the race.

Data to watch: 9.30am BBVA Mortgage Approvals. 3pm New Home Sales & NHS Change. Baker Hughes Oil Rig Count.

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