Rising Interest Rate Support Further Propelled the Euro

Rising interest rate support further propelled the euro. EUR/USD came within reach of the 1.093 top (close 1.0905). The decline of the yen slowed (USD/JPY closed 132.70). EUR/GBP again finished near the 0.88 pivot.

Bitcoin Adjusting First Quarter Gains

The crypto market’s capitalisation fell by 1.1% over the past day to 1.17 trillion, which resembles profit-taking after 50% of market growth in the first quarter of this year.

Canada's Economy Bounces Back in January, Points to a Strong February 

The Canadian economy expanded by 0.5% month/month (m/m) in January, above Statistics Canada's flash estimate of 0.3% m/m. The flash estimate showed a +0.3% m/m change for February.

US: Spending Slows, PCE Deflator Rises Less Than Expected

Personal income growth accelerated to 0.3% month-on-month (m/m) in February, from 0.6% m/m in January, but above market expectations for a more modest gain of 0.2% m/m. Compensation of employees (+0.3% m/m) accounted for most of the growth.

EUR/USD Edges Lower as Eurozone Inflation Slides

EUR/USD is slightly lower on Friday. In the European session, EUR/USD is trading at 1.0883, down 0.21%. The euro continues to look sharp and is poised to record its fifth winning week in a row. Eurozone headline inflation fell sharply, but the core rate ticked higher. In the US, the Core PCE Price Index was within expectations.

Sunset Market Commentary

On FX markets, the euro after a nice rebound, was captured by some end-of-week (quarter?) fatigue. Yesterday and this morning, the EUR/USD 1.0930 correction top was within reach, but the resistance did its job, sending the pair back below the 1.09 big figure (currently 1.0885).

Research US

The series of stronger-than-expected macro data releases seen in February appears to have continued into March. This is consistent with the most acute banking sector risks now seemingly easing, as Fed's emergency lending facilities have improved even the smaller US banks' liquidity buffers above pre-pandemic levels. The combined use of the facilities edged lower this week and interbank lending markets remain calm for now.

Week Ahead – Nonfarm Payrolls to Set the Tone for US Dollar

With the banking turmoil receding, market participants will turn their attention back to economic releases. The spotlight will fall on the US employment report, where another strong reading could temper speculation that the Fed will start cutting rates soon, helping the wounded dollar to recover. Meanwhile in Australia and New Zealand, central banks are expected to take different paths.

RBA Will Likely Hold Rates, But a Hawkish Pause Might Still Save the Aussie

The Reserve Bank of Australia meets on Tuesday to set interest rates and is expected to announce its decision at 4:30 GMT. Investors are anticipating that the central bank will bring to a halt its run of 10 straight meetings of rate increases as inflation finally appears to have peaked and economic growth has lost some momentum lately. A pause would be negative for the Australian dollar, but much will depend on whether the RBA maintains a tightening bias.

Dollar Preparing to Stare into the Abyss

The dollar index is ending with a decline for the fourth of the last five weeks, almost completely erasing the gains from February’s rise. Although it cannot be ruled out that the quarterly portfolio shakeout will create traction in the Dollar, it is still more likely that the US currency will fall further in the coming quarters.