Week Preview: US Dollar weakens amid trade doubts with NFP and Eurozone HICP approaching

Weekly Overview: US Dollar and Major Markets

This week, the US Dollar (USD) weakened as investors reacted to ongoing geopolitical tensions and shifts in US trade policy. The Supreme Court's decision to overturn Trump-era tariffs prompted new tariffs from the former president, adding to market volatility. Despite unexpectedly strong Producer Price Index (PPI) figures, the Greenback failed to recover.

The US Dollar Index (DXY) hovered near 97.60, slipping by about 0.20% for the day and ending the week with a slight loss. Traders remained cautious, influenced by uncertainty surrounding global politics and trade developments.

Currency Market Highlights

• EUR/USD: The pair traded close to 1.1810, rebounding during the US session. Germany's preliminary Harmonized Index of Consumer Prices (HICP) for February came in below forecasts at 2% year-over-year, and 0.4% month-over-month. European Central Bank (ECB) President Christine Lagarde addressed the European Parliament, reaffirming that inflation is expected to return to 2% gradually, with food prices easing by 2026. She also confirmed her intention to complete her term, dispelling rumors of a leadership change.
• GBP/USD: Trading near 1.3470, the British Pound regained some strength after nearing a one-month low. Bank of England (BoE) Governor Andrew Bailey indicated that rate cuts remain possible, as inflation is projected to reach the 2% target.
• USD/JPY: The pair was around 156.00, stabilizing after recovering most intraday losses. Tokyo's Consumer Price Index (CPI) rose 1.6% year-over-year in February, while the CPI excluding fresh food fell below the Bank of Japan's 2% target for the first time in 2024.
• AUD/USD: The Australian Dollar traded near 0.7120, reversing earlier losses. Attention now turns to the upcoming TD-MI Inflation Gauge release in Australia.
• USD/CAD: The pair hovered around 1.3630, hitting a nearly two-week low as investors processed economic data from both countries. Canada's GDP shrank at an annualized rate of 0.6% in the fourth quarter, following a revised 2.4% growth in the previous quarter.
• Gold: Gold traded near $5,260, marking a one-month high amid ongoing geopolitical risks. The precious metal is attempting to reclaim its record peak of $5,598 set earlier this year.

Upcoming Economic Events: Key Speakers and Reports

Market Voices and Central Bank Officials

• Sunday, March 1: ECB's Nagel
• Monday, March 2: ECB's Elderson, ECB's Nagel, ECB President Lagarde, BoE's Ramsden, RBA Governor Bullock
• Tuesday, March 3: BoJ Governor Ueda, Fed's Williams, ECB's Sleijpen, ECB's Kocher, Fed's Kashkari
• Wednesday, March 4: ECB's Cipollone, BoC Governor Macklem, ECB's De Guindos
• Thursday, March 5: ECB's De Guindos, ECB's Kocher, ECB President Lagarde
• Friday, March 6: ECB's Cipollone, Fed's Daly, Fed's Hammack, Fed's Paulson

Major Economic Data Releases and Central Bank Meetings

• Monday, March 2: Australian TD-MI Inflation Gauge, Chinese February RatingDog Manufacturing PMI, German January Retail Sales, Swiss January Real Retail Sales, Spain February HCOB Manufacturing PMI, Italy February HCOB Manufacturing PMI, Germany February HCOB Manufacturing PMI, Canadian February S&P Global Manufacturing PMI, US February ISM Manufacturing Employment Index, US February ISM Manufacturing New Orders Index, US February ISM Manufacturing PMI, US February ISM Manufacturing Prices Paid, New Zealand January Building Permits s.a., Japanese January Unemployment Rate
• Tuesday, March 3: Australian January Building Permits, Eurozone HICP, Italian February flash CPI, Australian AiG Industry Index, Australian February S&P Global Composite PMI, Australian February Global Services PMI
• Wednesday, March 4: Australian Q4 GDP, Chinese February NBS Manufacturing PMIs, Chinese February RatingDog Services PMI, Swiss February CPI, Spain February HCOB PMI, Germany February HCOB PMI, Eurozone February HCOB PMIs, Eurozone January PPIs, Italian Q4 GDP, US ADP Employment Change, US S&P February Global Composite PMI, US February ISM Services Employment Index, US February ISM Services New Orders Index, US February ISM Services PMI, US February ISM Services Prices Paid, US Fed's Beige Book
• Thursday, March 5: Australian January Trade Balance, Eurozone January Retail Sales, US February Challenger Job Cuts, US Initial Jobless Claims, US flash Nonfarm Productivity, US flash Unit Labor Costs (Q4)
• Friday, March 6: Germany January Factory Orders n.s.a., Eurozone Employment Change (Q4), Eurozone GDP (QoQ) (Q4), US February Average Hourly Earnings, US February Labor Force Participation Rate, US February Nonfarm Payrolls, US January Retail Sales, US February U6 Underemployment Rate, US February Unemployment Rate, Canadian February Ivey PMIs