The U.S. dollar is advancing this morning, continuing its momentum from Friday’s trading session.
Overall, the Bloomberg Spot Dollar Index is up for its fifth straight day and it at the highest level in seven weeks. Headlines over the weekend benefited the dollar including U.S. Treasury Secretary Steven Mnuchin’s statement that he is considering a trip to China in hopes of averting a trade war.
Analysts are also pointing to a widening spread on 10-year Treasury bonds. The bonds closed in on 3% since the first time since January 2014. Increased confidence in the U.S. economy has dampened demand for Treasuries as a safe-haven.
Later this morning, Markit’s manufacturing and service PMI will cross the wires and could dictate the dollar’s sentiment for the rest of the day. Also, existing home sales are expected to show a modest 0.2% growth in March, down from 3.0% in February. The biggest risk events on the U.S. docket are durable goods orders on Thursday GDP on Friday.
The Euro in under renewed pressure this morning and it is trading at the weakest level in two weeks. The common currency is now less than half a percent from its lowest level of 2018. The Euro could not find support even after data showed that Eurozone preliminary PMI showed stronger than expected activity in French and German service sectors. Overall, the composite Eurozone PMI remained unchanged at 55.2, but better than the expected 54.8. The European Central Bank will release their interest rate decision on Thursday. While it is widely expected that the ECB will hold their current policy, traders will be looking for signs as to how the central bank will exit its stimulus.
The British pound is even lower this morning after taking a beating last week. Early last week, GBP/USD rose to the highest level since the Brexit vote. However, sterling has fallen over 2.0% as traders have pared back expectations that the Bank of England will raise interest rates later this week. BoE Governor Mark Carney seemed to throw cold water on the idea of lifting rates at their May meeting, indicating that there are more meetings in the future. Chances fell from about 80% to under 50%.