MACRO 4 minutes to read

Another month bites the dust

Summary:  Dollar bulls are cheering US GDP and personal consumption/expenditures beats while Wall Street trades broadly unchanged in the early New York hours as markets weigh macro data against the lack of a North Korea deal.


February is fading fast but it is not about to go out quietly. Higher than expected US Q4 GDP and Personal Consumption/Expenditures figures gave US dollar bulls something to cheer while the 2.6% increase in GDP easily beat forecasts for a 2.3% gain.

The Chicago PMI index was higher than expected, rising to 64.7 from 56.7 previously. This should also put a smile on faces at the “data-dependent” Federal Reserve, although this isn’t the data they are depending on – they want to see higher inflation.

Today’s GDP report replaced the “advance” and “second” estimates, which weren’t available due to the partial government shutdown.  
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This mornings US economic reports turned the US dollar from “mixed” at the New York open to unequivocally bullish as of 13:30 GMT – and that is despite reported dollar selling for month-end portfolio rebalancing purposes. Dollar demand was the dominate them for all of February. The greenback is set to close the month with gains against all the major G10 currencies, led by a 2.05% rally against the Japanese yen. AUDUSD was the second-biggest, loser shedding 1.9%. Diminished “no-deal Brexit” risks powered GBPUSD to a 1.7% gain.
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Change in G10 currencies versus USD in February (source: IFXA/Saxo Bank)
Wall Street had a great February but is mostly unchanged in early trading. Prices were a little wobbly at the open with the early end to the Trump/Kim Jong-Un summit being blamed, although that may be a dubious conclusion. More than likely, month-end adjustments and cautious comments from Trade Representative Lighthizer concerning the state of the China/US trade talks were bigger factors.
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GBPUSD (15-minute, source: Saxo Bank)
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