After a quiet session yesterday due to the US banking holiday for Presidents’ Day, the United States Dollar starts the week pulled in different directions as data from around the world is digested on market open.
Overview
US PMI data is due to be released at 9:45 Eastern Time this morning, which will provide the dollar with some sense of direction for the week. January’s reading showed a little slowdown in employment demand, but due to the prevailing cooling economic conditions at the time, firms were more willing to absorb costs rather than pass them to consumers. With recent data releases showing a resurgent economic backdrop, today’s reading will give an indication of the potential “landing” scenarios in the US.In geopolitical news, President Joe Biden’s surprise visit to Ukraine over the weekend ahead of the one-year anniversary of Russia’s invasion reaffirmed global support for the nation. China’s Foreign Minister Qin Gang spoke on the war yesterday, highlighting the nation’s deep worry about the potential for escalation in the conflict.
What to Watch Today…
- No major economic events are scheduled for today
- Monex USA Online is always open
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GBP ⇑
Pound Sterling posted its biggest gain against the greenback in five weeks this morning on PMI data out of the UK that showed growth for the first time in seven months. As a result, GBP gained nearly three-quarters of a percent against the buck before rebounding slightly.
This reading shows a surprising streak of resilience in the UK economy, and when combined with still-resistant inflation, may change the Bank of England’s calculus on just how high it needs to raise its benchmark interest rate.Rishi Sunak’s administration is also under pressure this morning as his failure to announce a Northern Ireland deal irked MPs across the political spectrum. The macro picture for the UK remains murky even after today’s surprise upside data.
ILS ⇓
The Israeli New Shekel is the biggest loser of the morning’s session so far, falling up to 1.2% against the buck to its weakest price since April of 2020. Israel’s central bank raised interest rates a surprise 50 basis points on Monday, but the nation’s deteriorating political situation overwhelmed what would ordinarily cause positive price action for ILS.
Twitter spats from senior Israeli officials called into question the independence of the Bank of Israel, as Foreign Minister Eli Cohen condemned the central bank for its decision to raise borrowing costs.
