Posted on March 4, 2015 by the XM Investment Research Desk at 3:28 pm GMT
The Canadian dollar strengthened after the Bank of Canada rate announcement and statement. As was mostly widely expected, the Bank held rates steady at 0.75%. This comes after Tuesday’s stronger fourth quarter GDP data. The greenback fell versus the loonie after the data to a low of 1.2487 from a pre-data high of 1.2542. Against the yen, the dollar was steady, keeping within a range of 119.46 and 119.81.
The US dollar was stronger against the euro and the pound throughout the European session, with the US ADP jobs data acting as a catalyst for further strength.
The ADP jobs report was lower-than-expected in February but what propelled the dollar higher was the revision to January’s number to a much higher figure at 250,000 from the previously reported 213,000. Last month, private payrolls rose by 212,000 jobs, below the 220,000 expected.
Other positive US data that helped buoy the dollar was the ISM non-manufacturing PMI which rose to 56.9 for February, slightly above January’s 56.7 and surpassing the expected 56.5.
Dollar strength pressured the euro down to a new 11 1/2-year low of 1.1064. Also weighing on the single currency is the upcoming launch of the new quantitative easing program by the European Central Bank. Tomorrow’s policy meeting and Mario Draghi’s news conference now comes into focus. If he sounds dovish on the Eurozone economy, this will lead to another leg lower for the euro. Today’s positive Eurozone retail sales data and February’s services PMI which were still in expansion territory, all did little to lift the euro. Retail sales in the euro area rose for the fourth straight month in January by 1.1% from December while Services PMI came in at 56.7 last month.
The UK Markit services PMI however was disappointing and slipped more than expected to 56.7, from 57.2 in January, and well below a forecast of 57.5. The data pushed sterling down to a low of 1.5307 versus the dollar. The weaker pound helped the euro bounce off a 7-year low of 0.7235 to 0.7265. Tomorrow’s Bank of England meeting comes into focus, although no change in policy is expected.