Daily Afternoon Report 29/02/2016
The dollar moved slightly higher against the other major currencies today, trading at a fresh three-week peak as Friday’s upbeat U.S. economic growth data continued to support and investors eyed the release of U.S. data later in the day.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.18% at a fresh three-week high of 98.31.
The safe-haven yen strengthened after continued to be underpinned after China took steps to weaken its currency and bolster market liquidity on Monday, adding to concerns over the outlook for the world’s number-two economy.
The yen also found support after a weekend meeting of G20 leaders ended without any concrete measures to get the global economy back on track after a rocky start to the year.
Meanwhile, the U.S Dollar remained supported after data on Friday showed that while the U.S. economy slowed in the fourth quarter, the pace of the slowdown was not as steep as initially estimated
Separate reports, showing consumer spending and inflation rose in January added to the view that the U.S. recovery is on track.
Data earlier showed that the euro zone’s consumer price inflation fell by 0.2% this month, missing expectations for a gain of 0.1% and following a 0.3% increase in January.
It was the first negative inflation figure since September, when consumer prices fell 0.1%, and is well below the European Central Bank’s target of close to but just below 2.0%.
Core CPI, which excludes food, energy, alcohol, and tobacco costs increased by 0.7% in February, below forecasts for 0.9% and down from 1.0% a month earlier.
Elsewhere, data today showed that the U.K. net lending to individuals rose by £5.3 billion in January, exceeding expectations for an increase of £5.2 billion. Net lending to individuals rose by £4.3 billion in December, whose figure was revised from a previously estimated £4.4 billion gain. Sterling remained under pressure amid ongoing uncertainty over the U.K.’s future in the European Union.
In Switzerland, data showed that the KOF Economic Barometer rose to 102.4 in February from 100.4 in January, whose figure was revised from a previously estimated reading of 100.3. Analysts had expected the index to fall to 98.8.