During today's Asian trading, the US dollar fell markedly against major currencies, reaching a 3-week low, while investors are preparing for the publication of PMI data for the eurozone, Britain and the United States, which will help assess the current state of the world's largest economies.
The US Dollar Currency Index (DXY), which tracks the dynamics of the dollar against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona) fell by 0.26% to 103.73. Yesterday, the index fell by 0.07%, as the minutes of the January Fed meeting showed that with risks to the outlook for inflation still seen as tilted slightly to the upside, most officials remain wary of cutting interest rates "too quickly." However, since the beginning of 2024, the index has added more than 2% amid weakening expectations of monetary easing by the Fed in the near term. According to the CME FedWatch Tool, markets see a 28.9% probability of a 25 basis point rate cut at the Fed meeting in May, and a 71.6% probability of a rate cut in June, with approximately 90 basis points of cuts priced in for this year.
The euro rose 0.3% against the US dollar. Economists said that the eurozone PMI indices for February (to be published at 09:00 GMT) should provide timely information on the state of the region's economy, as the European Central Bank (ECB) is considering when to start lowering interest rates. Stagnant growth and improving inflation trends are forcing the ECB to set a course for the start of rate cuts in the second quarter of 2024, and market participants will monitor the publication of the PMI in search of clues about what the appropriate path of rate cuts might look like. According to forecasts, the manufacturing PMI rose to 47.1 in February from 46.6 in January, and the PMI in the service sector increased to 48.7 from 48.4.
The Australian dollar rose 0.55% against the US dollar, helped by increased risk appetite among investors. Australia's PMI data also came into focus. Judo Bank said private sector activity improved midway into the first quarter, though growth was driven solely by the service sector. Higher new business supported the expansions in output and employment. Concurrently, inflation rose as both average input costs and output prices increased at faster rates. Overall sentiment remained positive, though the level of optimism eased to a three-month low. The services PMI climbed to 52.8 in February from 49.1 in January. However, the manufacturing PMI fell to 47.7 from 50.1 in January. The composite index improved to 51.8 in February from 49.0 in January.