(Bloomberg) -- The dollar fell against the majority of its Group-of-10 peers after inflation picked up in the US and data showed personal spending rising less than economists expected. The Canadian dollar fell on reports of stagnating growth due to tariff threats.
- The Bloomberg Dollar Spot Index fell 0.1% to a session low
- The Core PCE Price Index, the Fed’s favored inflation measure, showed inflation rising 0.4% from January; Data also showed personal spending rose less than survey expectations
- NOTE: US Consumer Spending Barely Rises, Key Inflation Gauge Picks Up
- “Traders seem to be focusing primarily on the personal spending component that came out this morning showing below market expectations and substantially below income growth. It looks like a signal that the US economy could be slowing down, something markets have been fearful of since the beginning of the tariff battle that has marked the first three months of this administration,” said Monex foreign-exchange trader Helen Given.
- “The further downward revisions to last month’s incoming and spending figures are giving people pause as well, but FX flows overall are fairly muted and still holding onto the bit of Dollar-positivity that’s been coming from month and quarter end flows after a dismal quarter for USD.”
- The yield on 10-year Treasuries slipped 8bps to 4.27%; divergence between long-term options dollar sentiment and US yields widens as one-year riskies hit least bullish sentiment since 2021
- USD/JPY fell 0.6% to 150.13
- Data showed the cost of living in Tokyo rose more than anticipated, keeping the Bank of Japan on track for further interest rate hikes
- EUR/USD rose 0.2% to 1.0822
- One-year risk reversals rose to 27bps, the highest since April 2021
- Inflation in France and Spain undershot expectations, supporting calls for more interest-rate cuts by the European Central Bank
- Money markets price 60 basis points of easing by year-end in total
- GBP/USD weakened a little to 1.2947; cable rose 0.2% on a weekly basis
- UK retail sales have risen strongly since the start of 2025, adding to evidence that the UK economy is starting to shake off the stagnation that has dogged the Labour government since it came to power last summer
- CAD/USD fell almost 0.1% to 0.6986
- Advance data showed Canadian economic growth stalling in February after tariff threats
- Morgan Stanley strategists including David Adams, Wanting Low and Dominic Krummenacher shifted their CAD view from bullish to neutral, writing “We think EUR/USD still has medium-term upside potential though we are more skeptical about its ability to break 1.12 in the near term. We look for better levels to re-enter longs”
Reporting by Vassilis Karamanis and Jade Khatib
