Euro Climbs as Inflation Falls to 2.4%; Ukraine Peace Deal Hopes Monitored
GBP
GBP/USD is currently trading at 1.2656 (interbank), while GBP/EUR stands at 1.2111 (interbank).
This morning, the seasonally adjusted S&P Global UK Manufacturing Purchasing Managers’ Index (PMI) fell to 46.9 in February, a 14-month low and down from 48.3 in January but above the earlier flash estimate of 46.4.
Following a tense Oval Office meeting with Donald Trump, Ukrainian President Volodymyr Zelenskyy was warmly received in the UK, where Prime Minister Keir Starmer confirmed that European leaders had agreed to develop a peace proposal for Washington.
It’s a relatively quiet week for UK economic data, with the main focus on PMI figures and speeches from MPC members, including Bank of England Governor Andrew Bailey. Bailey previously downplayed concerns about a 6% rise in wage growth fuelling inflation, instead pointing to other factors justifying rate cuts.
With an interest rate decision approaching this month, markets will be closely monitoring Bailey’s speech this week, as well as that of Catherine Mann, who previously shifted from a hawkish stance to voting for a 50 basis point rate cut in the last meeting.
Today’s Events (GMT):
14:45 - S&P Global Manufacturing PMI (Feb) – Actual: 46.9 vs Forecast: 51.6
EUR
EUR/USD is currently trading at 1.0450 (interbank), as markets ease slightly amid expectations of further ECB rate cuts this year.
The euro has regained some ground from a two-and-a-half-week low after Eurozone CPI inflation dipped to 2.4% in February, beating forecasts of 2.3%, while core inflation edged down to 2.6% and services inflation dropped to 3.7%, marking the first decline below 4% in nearly a year.
Investors are also monitoring renewed diplomatic efforts for peace in Ukraine and discussions on increased defence spending following a tense exchange between Trump and Zelenskyy at the White House.
The ECB is expected to lower interest rates again on Thursday, with the deposit facility rate projected to drop to 2.5% after a full percentage cut last year and an additional 0.25% reduction in January.
Today’s Events (GMT):
08:55 - Germany Manufacturing PMI (Feb) – Actual: 6.5 vs Forecast: 46.1
09:00 - Eurozone Manufacturing PMI (Feb) – Actual: 47.6 vs Forecast: 47.3
10:00 - Core CPI (Feb) – Actual: 2.6% vs Forecast: 2.5%
10:00 - CPI (Feb) – Actual: 2.4% Forecast: 2.3%
USD
The Dollar Index, which measures the U.S. dollar against a basket of major currencies, is currently down 0.2% at 107.12 after gaining 0.7% last week.
The U.S. dollar is retreating from recent highs following a tense Oval Office exchange between U.S. President Donald Trump and Ukrainian President Volodymyr Zelenskyy.
Meanwhile, U.S. Commerce Secretary Howard Lutnick confirmed that tariffs on Canada and Mexico would take effect tomorrow, though Trump has yet to decide whether to maintain the full 25% rate.
This week, traders will focus on key U.S. economic data, with February’s Nonfarm Payrolls (NFP) due on Friday. Labour market trends will play a crucial role in shaping the Federal Reserve’s policy stance. The Fed is expected to hold rates steady in March and May, with a 77% probability of a cut in June, according to the CME FedWatch tool.
Today, investors will assess the ISM and revised S&P Global Manufacturing PMI data for February.
Today’s Events (GMT):
15:00 - ISM Manufacturing PMI (Feb) - Forecast: 50.6
CAD
USD/CAD is currently trading at 1.4428 (interbank) after touching its weakest intraday level since February 4 at 1.4453.
Friday’s GDP data from Statistics Canada showed stronger-than-expected economic growth, with Q4 GDP expanding at an annualised rate of 2.6%, surpassing the 1.9% forecast.
Canada and Mexico have presented new evidence to the U.S. administration demonstrating their efforts to combat fentanyl trafficking, ahead of tomorrow’s implementation of 25% tariffs on their exports.
Oil prices have edged higher, with Brent crude currently at $72.90 per barrel, while West Texas Intermediate (WTI) is trading at $69.76 per barrel.
The main focus this week will be Friday’s Canadian employment data, with forecasts predicting 17.5K new jobs in February, down from 76K in January, and unemployment expected to rise slightly to 6.7%.
Jobs data has consistently beaten expectations in recent months, as the Bank of Canada’s aggressive rate cuts have provided economic stimulus.
No significant events are scheduled for today
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