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What’s happening: The US dollar gained versus the euro on Friday, with investors booking profits from the recent surge in the European common currency.
What happened: The EUR/USD forex pair recorded its first weekly decline since February 28 with sentiment being hit by the latest economic data.
The greenback found support after the US Federal Reserve signalled it was in no hurry to slash interest rates last week.
Why it matters: The US dollar has remained under pressure this year amid concerns around President Donald Trump’s trade policies impacting economic growth. However, the greenback found some respite last week after the Federal Reserve kept interest rates unchanged and Chairman Jerome Powell projecting just two rate cuts this year.
Powell’s comments also signalled that the impact of inflation of the recent tariffs might be “transitory”.
Meanwhile, the Bank of England kept its monetary policy unchanged, while the Swiss National Bank lowered its benchmark rate. European Central Bank policymakers signalled that there is room for interest rate cuts this year, amid rising concerns over global trade.
The Bank of Japan also left interest rates unchanged at its latest meeting, while warning of heightened economic uncertainty due to US tariffs.
The European currency also came under pressure after the latest economic data showed that Eurozone’s current account surplus had shrunk to €13.2 billion in January, from €26.5 billion in the year-ago period. The goods surplus narrowed to €15.4 billion, from €27.2 billion.
The Eurozone’s consumer confidence indicator also dipped 0.9 points to -14.5 in March, versus market estimates of an improvement to a reading of -13.0.
Meanwhile Germany’s upper house of parliament approved public borrowing reforms to revamp defence spending and revive Europe’s largest economy.
The EUR/USD pair fell 0.3% to 1.0822 on Friday. The forex pair shed 0.6% last week to record its first weekly decline since February 28.
The USD/JPY gained more than 0.3% on Friday, while the GBP/USD pair declined around 0.4%.
What to watch: Investors will continue monitoring the Trump administration’s tariff announcements.
Data on Chicago Fed National Activity Index (1630 UAE Time), S&P Global manufacturing PMI (1745 UAE Time) and S&P Global services PMI (1745 UAE Time) will be released today. The Chicago Fed National Activity Index, which declined to -0.03 in January, is expected to improve to 0.08 in February.
Analysts expect the S&P Global US manufacturing PMI to decline to 51.9 in March, from 52.7 in February, while the services PMI is projected to improve to 51.2 in March, from 51 in the previous month.
Context: Japan’s stock market closed on a mixed note on Friday, as investors assessed the latest economic data.
Details: Data released on Friday showed Japan’s annual inflation rate easing to 3.7% in February, from a 2-year high of 4.0% in the previous month. Overall inflation eased on a sharp decline in electricity and gas prices.
Japan’s core consumer price index rose 3% year-over-year in February, following January’s 3.2% increase. The figure came in higher than market expectations of 2.9%.
Shares of Mitsubishi UFJ, Sanrio and Sony Group were among the top gainers on Friday.
Japan’s Nikkei 225 rose 0.2% to close at 37,677.06 on Friday, while the Topix index added 0.29% to settle at 2,804.16.
Data released this morning showed Au Jibun Bank Japan manufacturing PMI fell to 48.3 in March, from 49.0 in February. The figure also came in lower than market estimates of 49.2. Japan’s services PMI also dipped to 49.5 in March, from 53.7 in the previous month. Nikkei 225 edged higher by 0.1% this morning.
What to watch: Investors await monetary policy meeting minutes from the Bank of Japan (0350 UAE Time) on Tuesday. The Bank of Japan maintained its key short-term interest rate at about 0.5% during its latest meeting, keeping it at its highest mark since 2008.
Other Markets: European indices closed lower on Friday, with the FTSE 100, DAX 40, CAC40 and STOXX Europe 600 Index down by 0.63%, 0.47%, 0.63% and 0.60%, respectively.
A US delegation is reportedly meeting Russian officials on Monday for talks on a ceasefire in the Black Sea. The news sent the RUB/USD pair lower in forex trading this morning.
Australia’s S&P Global Flash manufacturing PMI rose to 52.6 in March, from 50.4 in the previous month. This being the strongest growth in the region’s manufacturing activity since October 2022 lent support to the AUD/USD forex pair.
Chile’s central bank of held the policy interest rate at 5% at its recent meeting, sending the CLP/USD pair higher in forex trading this morning.
Argentina’s retail sales climbed 108.2% year-over-year at current prices in January. This being a slowdown from the 121.5% surge reported in the previous month exerted pressure on the ARS/USD forex pair.
Macau’s consumer prices fell by 0.16% year-over-year in February, following a 0.57% rise in the previous month, which sent the MOP/USD pair lower in forex trading this morning.
France’s HCOB composite PMI (1215 UAE Time), HCOB manufacturing PMI (1215 UAE Time) and HCOB services PMI (1215 UAE Time), Germany’s HCOB manufacturing PMI (1230 UAE Time), HCOB composite PMI (1230 UAE Time) and HCOB services PMI (1230 UAE Time), Eurozone’s HCOB composite PMI (1300 UAE Time), HCOB manufacturing PMI (1300 UAE Time) and HCOB services PMI (1300 UAE Time), UK’s S&P Global manufacturing PMI (1330 UAE Time), S&P Global services PMI (1330 UAE Time) and S&P Global composite PMI (1330 UAE Time), Mexico’s economic activity (1600 UAE Time) and mid-month inflation rate (1600 UAE Time), as well as Canada’s manufacturing sales (1630 UAE Time).
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