The euro was under pressure as it returned more of its recent gains against the dollar – dipping below the 1.08 mark for the first time in more than week. The euro was also buying less than 130 yen.
There was no clear catalyst for the euro’s weakness, although some traders cited nervousness about the situation in Greece, as the country’s proposed reforms were not met with approval by its creditors. More difficult negotiations lay ahead, as the country has various debt repayments to make during April and without additional cash, it could default.
The US dollar managed to gain additional ground despite mixed data during the previous session. US consumer spending barely grew during February as it missed expectations although income grew more than anticipated. Overall this shows that Americans might be saving a part of their windfall from lower energy prices. February pending home sales for contracts that have been signed but not completed however were stronger-than-expected, which showed the housing market in the US doing well.
The pound was also under some pressure after the UK parliament was dissolved the previous day ahead of the General Election next month. Political uncertainty is denting the pound’s allure.
The aussie was also under significant pressure, dipping to its lowest in almost two weeks against the US dollar and other currencies, as more investors expect a rate cut from the Reserve Bank of Australia the coming week. Positive risk sentiment, as US and Asian stocks (except the Japanese Nikkei) rallied and news that China will apply additional stimulus for public infrastructure and housing, did not help the Australian dollar. The aussie traded as low as 0.7617.
Looking ahead, there will be a number of interesting data points, particularly during the European session. The final revision to 4th quarter UK GDP will come out, expected to show a 0.5% quarter-on-quarter expansion and a healthy 2.7% growth year-on-year. The key data of the day will be released out of Eurostat, as February unemployment and more importantly flash inflation for March will be closely watched. Headline inflation is expected to remain in negative territory by posting a 0.1% annual decrease. A number of Fed speakers and business and consumer surveys will be watched for during the US session.