Forex Flash: Majors lower on USD as spending cuts kick in - OCBC Bank

Emmanuel Ng of OCBC Bank note that even as spending cuts kicked in for the US, majors ended mixed to lower on USD on Friday, while JPY and GBP under performed across the board.

On a broader scale, he comments that global PMIs released on Friday were mixed to softer than expected, dragging general confidence levels through the mud. He writes, “Notably, the pair of manufacturing PMIs out of China for Feb moderated from the previous month. Over the weekend, the Feb non-manufacturing PMI for China also dipped to 54.5 from 56.2 in January.”

In contrast, he notes that USD found some support from the better than expected ISM and Uni. of Michigan consumer confidence readings. Elsewhere, he sees that EUR remained under the pressure of macro/political uncertainty with the manufacturing PMI largely steady and still mired in contraction territory while the Jan unemployment rate continued to climb to 11.9%. As a result, EUR/USD also dipped briefly under the 1.3000 area.

Looking ahead, Ng comments that aside from the global data calendar, investors should look towards central bank rhetoric for further cues with the RBA rate decision on Tuesday, the BoC and the Fed Beige Book on Wednesday and the BoE and ECB on Thursday. Further, he adds that the BoJ meeting on Thursday will be closely scrutinised with dovish comments from BoJ nominee Kuroda early this morning being sufficiently bearish, commenting that he would do “whatever it takes to end deflation.”