EURUSD: Dollar Bolstered By Rally In 10-Year Treasuries

The EURUSD pair closed lower on Thursday, March 4, slipping 0.81% to 1.1964. Trading activity was low-key as market participants awaited Fed Chairman Jerome Powell’s speech.

The euro held steady at 1.2030 until the North American session. In European trading, buyers’ hands were tied due to lackluster retail sales. January retail sales in the eurozone plunged 5.9% compared to the previous month. The decrease in the indicator to a low last seen in April 2020 was attributable to the extension of lockdown measures in a number of Eurozone countries. The reading was projected to decline by 1.1%.

Sterling soared to 1.4017 on the back of remarks by UK Treasury Secretary Rishi Sunak, who unveiled a new £65 bln package of measures aimed at helping the country's economy recover from the crisis caused by the coronavirus pandemic.

During the North American session, Fed Chairman Jeremy Powell’s remarks drove all major currencies into negative territory. Powell had nothing to say about yield curve control. He merely noted that he expects some inflationary pressures going forward but they will not likely be enough to spur the central bank to hike interest rates. Market participants interpreted his comments as unwillingness to rein in rising sovereign yields.

The US 10-year bond yield spiked to 1.57%, topping last week’s high of 1.56% on concerns that rising inflation will force the Fed to tighten monetary policy faster than the market anticipates. The dollar strengthened across the board, while US equity indices retreated.

Todays macro schedule (GMT+3)

  • 10:00 Germany: factory orders (January)
  • 11:00 Switzerland: SNB foreign exchange reserves (February)
  • 11:30 UK: Halifax house price index (February)
  • 16:30 US: non-farm payrolls report: un employment rate and non-farm payrolls private (February); US and Canada: balance of trade (January)
  • 18:00 Canada: Ivey PMI (February)
  • 21:00 US: Baker Hughes weekly oil rig count
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Disclaimer: Forecasts which are made in the review constitute the personal view of the author. Commentaries made do not constitute trade recommendations or guidance for working on financial ...

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