An increased demand for safe-haven assets yesterday allowed the US Dollar to force gains against both the Euro and Sterling. With investors flocking to the Greenback in this time of uncertainty, the US Dollar Index (DXY) looks to reclaim last week’s high of 97.72. In Biden’s annual State of the Union speech, the President of the United States hailed the Ukrainian people’s “fearlessness” “courage” and “determination” to protect their country against invasion. Biden went on to add that Vladimir Putin had “badly miscalculated” the reaction that would come with invading Ukraine, claiming that NATO and its allies would fight to defend “every inch of territory”.
Also helping the Dollar yesterday was better-than-expected economic data. Economic activity in the “manufacturing sector grew in February, with the overall economy achieving a 21st consecutive month of growth”. February’s ISM Manufacturing PMI came in 0.6 over forecast, printing a final figure of 58.6. The survey also shows that all of the six biggest manufacturing industries - Transportation Equipment; Machinery; Computer & Electronic Products; Food, Beverage & Tobacco Products; Chemical Products; and Petroleum & Coal Products, in that order – registered moderate-to-strong growth in February.
GBPUSD started the Tuesday session trading at 1.3421 but quickly declined below the 1.34 handle. Cable struggled in the session and finished the day at 1.3336.
GBPEUR edged closer to the 1.20 mark yesterday as the Euro depreciated. The pair opened Tuesday at 1.1952 and closed at 1.1999.
EURUSD suffered another session of significant downside losses on Tuesday. The pair opened at 1.1229 and closed at 1.1115.
On the data front, it’s another busy schedule. At 08:55 Germany released its latest Unemployment Change and Unemployment Rate. At 10:00 the Eurozone will publish its flash Core Inflation numbers, expected at 2.5%. Then in the afternoon from the US, ADP Employment Change will be released at 13:15, followed by a speech from Fed member Bullard at 14:30. At 15:00 Fed Chair Jerome Powell will also be speaking.