The dollar struggled further as the euro further exerted its dominance. Yesterday’s inflation release from the Eurozone showed HICP, the ECB’s preferred measure, remained firmly at 3.2%. This reinforced the view that rates are likely to remain at current levels, and continued to support the common currency. The greenback, on the other hand, struggled with continuing fears over the US economy. Cable has pushed to just below 1.99 despite sterling’s own woes.In the US, construction spending fell 1.7% in January which is the steepest decline for 14 years. The ISM manufacturing index fell to 48.3 in February where a reading below 50 indicates that the manufacturing sector is contracting. These figures will raise fears that the US economy is heading for a recession. Eurozone and UK manufacturing sectors showed expansion with figures of 52.3 and 51.3 respectively, for the Purchasing Managers Manufacturing Index. Today’s focus will be on the Bank of Canada and the Australian Reserve Bank interest rate announcements.
