The dollar managed to hold on to the gains it registered during the US session, when a lower-than-expected weekly jobless claims number and a better-than-expected Services PMI survey helped the currency to rebound off its recent lows.
The dollar gained so as to top 119 once more against the yen, while euro / dollar was pushed under the 1.09 mark. The reversal in the euro’s fortunes was particularly noticeable, following a high of 1.1053 the previous day. The UK pound was faring relatively better after the positive retail sales numbers the previous day.
During early Asian trading, a flurry of economic numbers was released out of Japan. As is usual when a lot of different statistics are released at the same time, some were positive and some were negative. The most yen-negative number was that of inflation, as when excluding the effects of last April’s tax hike, inflation was at zero. Headline inflation for February was slightly lower-than-anticipated at 2.2% year-on-year when 2.3% was expected and 2.4% was the previous month’s number. There were more positive indicators from household spending numbers and from the labor market. Unemployment fell to 3.5% in February from 3.6% in January and the jobs-to-applicants ratio rose to a new multi-year high of 1.15. Despite the positive reports, if the present monetary stimulus fails to lift inflation, it is quite possible that extra stimulus will be attempted – which is weighing on the yen.
Looking ahead, following a relatively quiet session in Europe datawise, the focus will be on the Bundesbank conference in Frankfurt, where the Bundesbank’s Weidmann and Bank of England’s Carney will speak as well as the finance ministers of Germany and Spain. During the latter half of the European session, the final 4th quarter GDP numbers will come out from the United States followed by the final University of Michigan consumer sentiment numbers. A speech by Fed Chair Janet Yellen later in the session at a San Francisco Federal Reserve conference, which is entitled: “A new normal for monetary policy”, will attract plenty of attention.