The Dollar Finds Better Footing


The US has a light data schedule today. February auto sales are due, and the poor weather is likely to slow sales from the 16.63 mln seasonally-adjusted annual pace reported in January. However, while slowing auto sales dampen headline retail sales, the real takeaway from the US economy is its strength in Q1, helped by the $900 bln stimulus package approved last December. The US ISM figures were solid and stronger than expected. Output, orders, and employment rose, and employment rose. It appears that estimates for this Friday's employment report are also ticking up toward 200k. The increase in unfilled orders and longer delivery times (both measures are at multi-year highs) reflects the bottlenecks, which may spur short-term price increases but typically is not what makes for sustained inflation. Investors may be sensitive to headline risks emanating from the confirmation of hearings of the SEC head nominee Gensler and Chopra, nominated to head up the Consumer Financial Protection Bureau.

Canada reported December monthly GDP figures, but the interest will be in the Q4 20 figures. Canada was likely the fastest growing economy in the G7 in the last three months of 2020. Bloomberg's survey median forecast is for a 7.3% annualized pace in Q4. The US grew by 4.2%. Although it often reports its job figures the same day as the US, it does not do so this month. Canada's February employment report will be released on March 12. After yesterdays' worker remittance figures (a little stronger than expected) and Markit manufacturing PMI (44.2 vs. 43.0 in January), Mexico's calendar is quieter today, with January leading economic indicator and its monthly budget balance. Neither report are typically market movers. Tomorrow's central bank's inflation report may garner more attention ahead of the policy meeting on March 25.  

The US dollar is little changed against the Canadian dollar and remains within the pre-weekend range (~CAD1.2590-CAD1.2750). It met sellers in late Asia and early Europe near CAD1.2700. Initial support is seen near yesterday's lows (~CAD1.2640). The greenback remains within the February 25 range against the Mexican peso (~MXN20.37-MXN21.03). The first level of resistance today is near MXN20.80, but MXN21.00 may prove more formidable. 

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Read more by Marc on his site Marc to Market.

Disclaimer: Opinions expressed are solely of the author’s, based on current ...

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