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The final Euro-zone PMI services-sector index was revised to 49.6 from the flash reading of 48.8 with upward revisions for France and Germany.

ECB council member Knot stated that the central bank can flexibly adjust PEPP volumes if appropriate even within the current quarter. There were, however, also comments that purchases could start to be phased out from the third quarter if the bank’s projections hold up and a robust recovery was likely in the second half of 2021.

The German government stated that the health system is under threat and coming under pressure. Chancellor Merkel was reported to be backing a short national lockdown with restrictions set to be extended beyond April 18th as unease over European developments continued.

The overall US trade deficit widened to a record $71.1bn for February from a revised $67.8bn the previous month as exports declined at a faster pace than imports.

The dollar overall continued to lose ground in Europe with the Euro strengthening to above 1.1900 before a limited correction.

Federal Reserve minutes from March’s meeting stated that participants concluded that the economy stood distant from the central bank’s objectives and that it would take some time to achieve the targets. There were also comments that inflation risks had risen, but the situation overall was balanced. The majority view continued to indicate that the central bank would take a cautious stance in removing stimulus despite uncertainty over medium-term direction.

Fed Governor Brainard stated that the economic outlook had brightened considerably, although it will be some time before realized outcomes are achieved. Overall reaction to the minutes was contained, although the dollar posted slight net gains. Narrow ranges prevailed on Thursday with the Euro around 1.1875.



The dollar was unable to regain the 110.00 level against the Japanese currency ahead of Wednesday’s New York open. There were divergent opinions within the regional Fed boards. Dallas President Kaplan stated that he was willing to maintain the much more accommodative policy over the next few months, but that does not necessarily mean near-zero interest rates. Chicago head Evans stated that the target of making substantial further progress towards meeting the Fed goals won’t be met for a while. He added that the Fed only needs to be concerned if inflation becomes bothersome and that a 2.5% rate should not be viewed as being out of bounds.

San Francisco head Daly stated that it will take a year or two for inflation to get sustainably above 2.0%. Atlanta head Bostic, however, stated that there was evidence of inflation pressures increasing. The mixed rhetoric did not have a major impact on yields. The dollar did find support above 109.50 and edged higher to 109.75 after the Fed minutes. There were no major developments during the Asian session with the dollar overall failing to gain traction and traded around 109.65.



The final reading for the UK PMI services-sector index was revised down slightly to 56.3 from the flash reading of 56.8 and, although the composite output index strengthened to 56.4 from 49.6, this was slightly below market expectations. The data failed to provide any support for the UK currency and there was further sustained selling pressure during the European session. There was further evidence that unease over the AstraZeneca vaccine was undermining confidence.

Sterling dipped sharply to 1-week lows around 1.3730 against the dollar while the Euro strengthened sharply to 5-week highs around 0.8665.

After its latest review, the MHRA regulator issued a slight shift in guidance with a recommendation that under 30’s should be offered an alternative to the AstraZeneca vaccine.  The EU regulator stated that the benefits of the vaccine clearly outweigh the risks, but with no immediate agreement on revised guidance. Sterling rallied after the news conference with the Euro retreating to 0.8630. The RICS house-price data recorded an increase to 59% from 54% previously amid strong demand. The latest Imperial coronavirus survey indicated that the link between cases and deaths was breaking due to vaccine progress which helped underpin sentiment and maintain optimism that there the re-opening of the economy would remain on track. Sterling traded just above 1.3750 against the US dollar.



The Swiss franc maintained a firm tone on Wednesday as global developments tended to dominate. There was a further retreat in US bond yields which curbed potential selling pressure on low-yield instruments including the yen and Swiss franc. Precious metals also demonstrated some resilience which underpinned the Swiss currency.

The Euro retreated to near 1.1030 while the dollar dipped sharply again to lows around 0.9270.

The franc was little changed on Thursday as gains in equities limited potential demand and the dollar traded around 0.9290.




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