The month of February is off to a relatively calm start after the Federal Reserve, as expected, maintained interest rates yesterday. Strong, but decelerating manufacturing activity numbers from Europe this morning had minimal impact on currencies.
All quiet on the Western Front
The Fed’s statement with its decision to hold interest rates was slightly hawkish, calling household spending, employment and business fixed investments “strong.” The FOMC also expressed confidence that inflation would hit its 2% target this year. The stage is set for new chair Jerome Powell to raise interest rates after his first meeting in March.
The strong language did allow for the dollar to lift temporarily, but E.U. Markit Manufacturing PMIs raised the EUR/USD pair, trading above 1.245.
U.S. jobless claims for the week ending Jan. 26 out this morning were better than expected with 230,000 Americans filing a first-time unemployment claim as opposed to the 238,000 expected. Continuing unemployment numbers were up 13,000 to 1.95 million people. We’ll see if that has any impact on the dollar as the day progresses.
Pound strong despite poor PMI
Despite weak manufacturing PMI numbers out Thursday, the sterling is still one of the strongest performers this week.
GBP/USD pair retreated from weekly highs, but is holding above 1.42 this morning. January manufacturing data for the U.K. in January dropped to the lowest since June 2017, due to lower production and rising prices.
Brexit politics are still plaguing the country and Theresa May, but it isn’t wildly impacting the pound. Speaker of the House of Commons John Bercow said the complete Brexit impact study, parts of which were leaked earlier this week, should be made public “as a matter of urgency.”
More data ahead
Still up this morning, are the Markit Manufacturing PMIs for the United States and Canada, as well as the ISM Manufacturing PMI for the U.S. This is all ahead of Friday’s release of U.S. nonfarm payroll numbers and the unemployment rate.