Markets

Dollar Finds Fresh Bid

Coins stacked on top of performance papers

Market Drivers February 21, 2017

EZ PMI's improve

Carney offers nothing new

Nikkei 0.66% Dax 0.48%

Oil $54/bbl

Gold $1231/oz.

Europe and Asia:

EUR EZ PMI Composite 56.0 vs. 54.3

GBP UK PSNB -9.8B vs. -14.4B

North America

USD Flash PMI 9:45

On the first full trading day of the week, after a holiday in North America, the dollar found a fresh bid in Asian and early London dealing rising against all it majors trading partners, with EUR/USD especially weak throughout the night.

EUR/USD broke through the 1.0600 barrier and kept falling all the way through 1.0550 in steady one-way trade today. The selling did not abate despite relatively upbeat economic data as the flash PMI's from the region came in better than expected.

In Germany, both PMI showed an improvement with manufacturing rising to 57 from 56.2 while services increased to 54.4 versus 53.6. In France, the data was more mixed with manufacturing declining but services rising. Overall the PMI Composite data from the region stood at 56.0 versus 54.3 comfortably above the 50 boom/bust region and it best reading in more than 5 years.

PMI data provides some of the best, most timely readings of the economic activity in the region, yet despite the better than expected readings, the EUR/USD remained under pressure all night long as rates in the region continued to decline. German 2-year yields dipped to an all-time low of -84bp as investors continued to seek safety. The single currency is now trading on political rather than economic concerns as populist parties in both Netherlands and France show no signs of losing support.

In Netherlands, Gert Wilders Freedom Party is leading the polls, while in France Marie Le Pen is also ahead of her rivals, but neither candidate commands more than 25% of the total vote and therefore their chances of winning majority rule are actually slim. Still, with so much political surprise in 2016, investors are not discounting any scenarios and the prevailing wisdom in the market appears to be - sell first, ask questions later.

Meanwhile in UK BOE Chief Mark Carney testified in front of Parliament Treasury committee essentially reiterating his past views that while UK economy continues to expand, wage growth remains stagnant and therefore risks of runaway inflation remain minimal. The testimony so far had no impact on GBPUSD trade with cable steady at the 1.2425 level. The pair remains well supported ahead of the 1.2400 figure but may test that level as the day proceeds.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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Boris Schlossberg

Mr. Schlossberg is a regular contributor to CNBC's Squawk Box and a commentator for CNBC Asia and CNBC Europe. His daily currency research is widely quoted by Reuters, Dow Jones and Agence France Presse newswires and appears in numerous newspapers worldwide. Mr. Schlossberg has written for SFO magazine, Active Trader and Technical Analysis of Stocks and Commodities. He is the author of Technical Analysis of the Currency Market and Millionaire Traders: How Everyday People Beat Wall Street at its Own Game, both of which are published by Wiley

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