Forex Afternoon Wrap for 4th March

Key Notes:

• Australia GDP q/q 0.5% vs. 0.6%; GDP y/y 2.5% vs. 2.7% previously
• HSBC Services PMI 52 vs. 51.8 previously
• Spain services PMI 56.2 vs. 56.6
• Italy services PMI 50 vs. 51.4
• French services PMI 53.4 vs. 53.4
• German services PMI 54.7 vs. 55.5
• Eurozone composite services PMI 53.7 vs. 53.9
• UK services PMI 56.7 vs. 57.5
• Eurozone retail sales m/m 1.1% vs. 0.2%
• US ADP nonfarm employment change 212k vs. 219k

Later

• Fed Dudley speech
• Fed Evans Speech
• BoC Rate statement
• US ISM non-manufacturing

A day after the RBA’s unchanged interest rate, Australia’s GDP data barely moved, rising 0.5% and below estimates of 0.6%. The Aussie was mixed across the board, struggling to push higher above yesterday’s high of 0.7844. The Kiwi Dollar continued to chug along higher posting session highs to 0.759 at the time of writing. The Yen was trading mixed with lack of any clear data.

The European trading session saw the services PMI data being released across various Eurozone countries. The Euro declined sharply as services PMI came out weaker than expected across the board including the Eurozone Composite services PMI. EURUSD broke down below 1.1158 handle to set a new low to trade at 1.112 levels.

The British Sterling was also weaker as UK services PMI was also lower than expected. The Cable dipped below 1.536 levels at the time of writing and any further declines will likely test down to 1.52858 levels ahead of the US trading session open.

The Greenback looks poised to resume another bullish leg in its uptrend but risks from this Friday’s jobs report looms large.  The Greenback is trading near previous highs of 95.85 and essentially a break above 95.85 is required for the Greenback to set its sights on new highs.

The Dollar was trading soft after the ADP jobs report showed a growth of 212k, below estimates of 219k for the month of February. Data for the previous month was revised higher to 250k. At the time of writing, EURUSD managed to reverse from 1.112 lows while USDCAD was trending lower trading below the 1.25 psychological level. GBPUSD was however unchanged while USDJPY continued to drift lower.

Later this evening, the Bank of Canada will be releasing its monthly interest rate decision. Consensus is largely poised for BoC to hold its rates steady at this meeting in light of a better than expected CPI and GDP data. However, the BoC statement could contain forward guidance which would be dovish. The USDCAD was trading lower ahead of the interest rate decision but within the longer term, the uptrend looks to be intact.

Also on tap will be US non-manufacturing ISM data followed by speeches from Fed members Dudley and Evans ahead of the FOMC statement later this month.