Forex Weekly Outlook March 1-5: Powell Stays Dovish, PMIs And US Nonfarm Payrolls Next

Photo by Dmitry Demidko on Unsplash

Photo by Dmitry Demidko on Unsplash

The US dollar showed some bounce last week, posting gains against other major currencies. COVID-19 remains a major drag on economic growth, but there is light at the end of the tunnel with the rollout of vaccine programs. In the US, the Biden stimulus plan was narrowly approved by the House of Representatives and faces its next hurdle in the Senate.

Eurozone headline CPI gained 0.9% and the core reading climbed 1.4% in January. This confirmed the original estimate. France, the second-largest economy in the eurozone, showed a 1.4% contraction in GDP in Q4 of 2020.

UK employment numbers were stronger than expected. Unemployment claims fell by 20 thousand, the first drop in three months. Wage growth continues to accelerate and hit 4.7% in December, up from 4.1%. The unemployment rate remained unchanged at 5.1%. At a parliamentary hearing, BoE policymakers said they did not expect inflation to shoot above the bank’s 2% inflation target.

In the US, Fed Chair Powell had a dovish message for the markets in his testimony before Congress. Second-estimate GDP for Q4 came in at 4.1%, revised upwards from 4.1%. There was positive news from Durable Goods reports, with strong acceleration in January. The headline read jumped 3.4% while Core Durable Goods rose 1.4%.

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