US Dollar Moves Higher, Trying to Shrug Off US-China Trade Tension
The euro fell against the US dollar amid weak data on business activity in the Eurozone and retail sales in Germany. The US dollar moved higher against major currencies today, snapping three days of declines as markets attempted to shake off concerns over trade tensions and a tech selloff that sent Wall Street plunging on Tuesday.
Eurozone PMI manufacturing was finalized at 56.6 in March, unrevised, down from February’s final reading of 58.6. It’s also the biggest fall in the series since June 2011. Germany manufacturing PMI was revised down to 58.2, from 58.4. France manufacturing PMI was revised up to 53.7, from 53.6. German retail sales fell by 0.7% in February and marked the third decline in monthly sales. It was expected that sales will grow by 0.6%. Swiss retail sales dropped 0.2% yoy in February, better than expectation of -0.7% yoy.
The British pound received some support from strong data on the British PMI manufacturing for March, but then rolled back against the backdrop of the strengthening of the US dollar. Activity in the UK manufacturing sector accelerated last month. Research firm IHS Markit said its manufacturing purchasing managers’ index rose to 55.1 in March, compared to forecasts for a reading of 54.8. The prior month’s reading was 55.0.
No changes in the parameters of monetary policy were expected from the April meeting of the RBA, and these expectations were fully justified. The RBA left the discount rate at 1.5%. The regulator's accompanying statement contained expectations of keeping inflation low at "some time". The most important outcome of the last meeting of the RBA, most likely, is to strengthen the confidence of market participants that in the near future from the Australian central bank should not be expected to consider the issue of tightening its monetary policy.