Despite there being some mixed manufacturing data from the US yesterday, the dollar ticked higher taking USDJPY back above the 120.00 level and the dollar index itself hit a fresh eleven year high. This resurgence in the dollar has surprised some considering that, payrolls aside, the economic data has been less than impressive which allowed some currencies to recover against the greenback in February. The dollar bull market looks to have re-established itself and this is supported by the move in US 10 year Treasury yields getting back above 2%. However overnight the RBA kept rates on hold, when market expectations were for a cut to 2.00% and as a result there was a little bit of dollar profit taking with AUDUSD recovering back above the 0.7800 level and USDJPY back below 120.00 this morning.
Today things are a little quieter following yesterday’s full diary of manufacturing surveys, but one to watch this morning is the UK’s construction PMI. GBPUSD has pulled back from recent highs above the 1.5500 level and sits at 1.5385 at the time of writing, so a dip in the construction figure below the expected 59.0 might see GBPUSD drift a little lower to test 1.5320-30, whereas a stronger number could see a bounce and push back to the mid 1.5400 area and even test 1.5500. This afternoon is quiet on the data front after which we build up to a very busy second half of the week with central banks being a major focus tomorrow and Thursday (Bank of Canada Wednesday, BOE and ECB Thursday).