On Monday, Eurostat preliminary data release showed a drop in the Eurozone’s CPI (Consumer Price Index) to a one-year low, for the month of February. This adds more pressure on the ECB’s struggle to increase economic stimulus this month. The figure came at -0.4% on a monthly basis, below the expected 0.1% rise. The yearly reduction is off 0.2% compared to a previous price growth of 0.4% in January. With the exception of energy prices, all other HICP (Harmonized Index of Consumer Prices) items scored negative levels. The core inflation, on the other hand, went up 0.7%, but still under the expected 0.9%.
The AUD/USD pair went down early in the Tuesday session, almost resetting the bar for daily lows, but managed to recover later in the day after the RBA (Reserve Bank of Australia) decided to hold their current monetary policy rates. The pair jolted on a bullish sentiment, managing to climb back to the mid-0.71 area after RBA announced that their main monetary policy rate will remain at 2.0% in the near future. The release also stated that due to low inflation, there is a significant amount of maneuver space for any further easing if the case; lower rates stand as a good support for demand. Whatever the case, the upside is still capped because of China’s latest figures showing the downstream trend has not reversed yet, the manufacturing PMIs (Purchasing Managers’ Index) for Caixin and NBS printing lower.
The CAD remains on the upside, pushing the USD/CAD pair down in the 1.3410/20 area and resetting the 3-months low benchmark. The major was pushed lower by the good Canadian GDP (Gross Domestic Product) data, the expectations being exceed with the figure posting a 0.8% annual growth pace in the 4th quarter of 2015 (versus an expected 0.1%). Also, December’s GDP went up 0.2% on a monthly basis, beating expectations.
For what regards the EUR, things are going from bad to worse, the EUR/USD printing fresh lows near the 1.0835 handle. The bearish tone became more pronounced with the release of latest US ISM (Institute of Supply Management) manufacturing index, which surprised for the upside by posting 49.5 for the month of February, over the expected 48.5 and above January’s 48.2. Together with the favorable Markit reading, the data is releasing a lot of pressure from the greenback.
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