EUR/USD, GBP/USD, USD/CAD, USD/JPY – Traders React To PMI Data

Key Insights

• EUR/USD is trading near the 50 EMA. 
• GBP/USD gained upside momentum and moved towards the 1.2150 level. 
• USD/JPY continues its attempts to settle above the 135 level. 

U.S. Dollar

U.S. dollar is flat against a broad basket of currencies after the release of U.S. economic reports.

Manufacturing PMI increased from 46.9 in January to 47.8 in February, while Services PMI improved from 46.8 to 50.5. Numbers above 50 show expansion. Both reports exceeded analyst estimates. Meanwhile, Existing Home Sales report indicated that the housing market remained under significant pressure.

Treasury yields tested new highs, but this move did not provide sufficient support to the American currency.

EUR/USD

EUR/USD remains stuck near the 50 EMA after PMI data. Euro Area Manufacturing PMI declined from 48.8 in January to 48.5 in February, while Euro Area Services PMI improved from 50.8 to 53.

Euro Area ZEW Economic Sentiment Index increased from 16.7 in January to 29.7 in February, compared to analyst consensus of 22.3. The reports showed that the European economy had a decent chance to avoid a recession. EUR/USD remained unchanged as traders were not ready to bet on a more aggressive ECB after the release of the better-than-expected economic data.

GBP/USD

GBP/USD rallied as PMI reports exceeded analyst expectations. UK Manufacturing PMI improved from 47 to 49.2, while UK Services PMI grew from 48.7 to 53.3.

The surprisingly strong reports boosted chances for more aggressive moves from the BoE and provided material support to GBP/USD.

USD/CAD

USD/CAD moved towards the 1.3500 level after the release of inflation data from Canada. Inflation Rate declined from 6.3% in January to 5.9% in February, compared to analyst consensus of 6.1%. Core Inflation Rate decreased from 5.4% to 5%. Inflation is slowing down so BoC would not have to raise rates at the next meeting, which is bearish for the Canadian currency.

Other commodity-related currencies are also moving lower in today’s trading session. AUD/USD declined towards the 0.6870 level, while NZD/USD settled near 0.6220.

USD/JPY

USD/JPY continues its attempts to settle above the 135 level as traders focus on rising Treasury yields. Currently, the yield of 10-year Treasuries is trying to settle above the 3.95% level. In case this attempt is successful, it will move towards the psychologically important 4.00% level, which will be bullish for USD/JPY.

For a look at all of today’s economic events, check out our economic calendar.