The US Dollar and Pound are Supported by Strong PMI Surveys; The Kiwi is Rising
According to data released on Tuesday, U.S. business activity unexpectedly rebounded in February to its highest level in eight months, while the UK flash composite Purchasing Managers' Index (PMI) similarly surged to 53.0 this month, crossing the 50-point threshold for growth for the first time since July. Except for sterling, which surged 0.6% on Tuesday, the dollar rose against most major currencies following the positive statistics.
The dollar and pound rose on Wednesday as an unexpected comeback in economic activity in the United States and the United Kingdom increased the prospect that their respective central banks would need to boost interest rates further.
In other news, the New Zealand dollar rose after the Reserve Bank of New Zealand (RBNZ) lifted interest rates by an expected 50 basis points on Wednesday but underlined that inflation is too high and employment is beyond its maximum sustainable level. According to data released on Tuesday, U.S. business activity unexpectedly rebounded in February to its highest level in eight months, while the UK flash composite Purchasing Managers' Index (PMI) similarly surged to 53.0 this month, crossing the 50-point threshold for growth for the first time since July.
Except for sterling, which surged 0.6% on Tuesday, the dollar rose against most major currencies following the positive statistics. It was recently down 0.05% at $1.2107. In the eurozone, the flash composite PMI rose to a nine-month high of 52.3 in February, helped by surprisingly robust service growth.
The euro, on the other hand, did not gain from the report, falling 0.36% in the previous session. It was recently up 0.04% at $1.0652. "It was kind of a relativity problem in a way, that while the services sectors fared better overall, the extra push that sterling received was because of that very, very strong performance," said Rodrigo Catril, senior currency strategist at National Australia Bank.
"I believe the euro is still in a more challenging condition, given that there is a broad perception that the ECB still has work to do, which puts a little burden on their growth prospects." The dollar soared to a two-month high of 135.23 against the Japanese yen in the previous session before falling a little to 134.91 in early Asia trade on Wednesday.
The US dollar index was at 104.13, up 0.3% from the previous day. The recent uptick in corporate activity in the United States comes on the heels of a raft of solid economic indicators pointing to a still-tight labor market, sticky inflation, and healthy retail sales in the world's largest economy.
It's that time of year again. This time, it's that time of year again for a new set of photos of the same people. In the previous session, two-year rates reached a three-month high of 4.738% before falling to 4.6933%.
In early Asia trade on Wednesday, the benchmark 10-year note yield reached 3.9660%, its highest level since November. In other currencies, the Australian dollar fell as statistics indicated that salaries in Australia climbed at the quickest annual rate in a decade last quarter, but fell short of market expectations.
The Australian dollar slid 0.3% on the release of the report and was last 0.1% down at $0.6849. The kiwi jumped 0.39% to $0.6238, having previously risen about 0.5% to an intra-day high of $0.6248 following the RBNZ's cash rate announcement.