Hikes, Hikes, Hikes....

In Summary

• Euro rates going up, how far though?
• Powell testimony will determine next support for the USD
• UK economy seems to waken up after nearly deeping into recession

USD:?The US dollar began the week lower as investor await today's testimony from FED chair Jerome Powell to determine how hawkish the US central bank will be. Liquidity conditions started to dry up, which is understandable given the amount of event risk that remain for the remainder of the week. The patchy liquidity and overall hesitation led to marginal dollar strength with the greenback depreciating against the Euro. During the testimony participation in major currency pairs will pick up, but,given Powell's message hasn't changed since December, we expect where the new terminal rate will land. We still remain positive that the new hike will not exceed 25bp in the March meeting.

EUR:?The Euro performed exceptionally well against the dollar yesterday. The main driver was the hawkish tone that Rober Holzmann set that the ECB should move forward with at least 200bps hikes spread on the next 4 meetings. Even Lagarde commended during the weekend that ''she doesn't know how high rates will go, but they need to be higher than the current stage''. We expect some volatility today as EU retail sales are released, which will give more info on how consumers behaved in February.

GBP:?Sterling took a breath as better figures in expected house price data were released from Halifax that UK house prices increased by 1.1% in February and 2.2% year on year released along with an uptick in retail sales. The pound was driven also by the positive surprise of the Construction PMI that printed 54.6. Looking forward, the U.K. is to publish GDP data on Friday showing how the economy performed in January, after narrowly avoiding recession in the Q4 of 2022.