Markets continue to back the greenback with a continuation of positive data come from the US economy. The ADP report was adding 298,000 new jobs during February and this drove demand for the dollar as investors are expecting a strong Nonfarm Payroll report this Friday. US 10yr treasury yields rose from 2.51% to 2.58% and to a three-month high while markets fully price in a rate hike from the Fed next week. At the same time, oil was on its knees and crashing almost $3.00 in WTI and below $50.00bbl while commodities elsewhere also struggle in a dollar strong environment.
The euro was down around 50pips, the yen lost 116 pips between highs and lows on the day and sterling received a battering despite the chancellor's optimistic Budget that supported the pound earlier in the day. EUR/GBP as the driver and took on the bears just below the 0.87 handle to fresh highs. The AUD fell from 0.7600 to 0.7532 and another three-month low while the NZD fell from 0.6980 to 0.6905 to another a two-month low leaving the cross consolidated around the 1.0900 area. CAD took a big hit on WTI towards the close down to 1.35 vs the greenback and making YTD lows.
For the day ahead the main focus will be with China CPI and PPI for Feb with the median estimate for CPI being 1.7% yoy. We then turn heads towards the ECB in the European session: "At their March meeting, it is likely that President Draghi and the Governing Council will recognise the positive economic developments, but their focus should remain on lingering slack – best represented by soft core inflation (0.9%yr) and high levels of unemployment outside of Germany," explained analysts at Westpac, adding, "There remains a need for continued extraordinary support of the economy."