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The final Euro-zone PMI manufacturing index was revised lower to 58.2 from the flash reading of 58.4, although both the Italian and Spanish readings were slightly stronger than expected.  There was a slight slowdown in the rate of increases in costs and prices with pressure on delivery times fading slightly.

The Euro gradually lost ground ahead of the New York open with a further dip in expectations surrounding any ECB policy tightening this year.

German consumer prices increased 0.9% on the month with the year-on-year increase increasing to 5.1% from 4.9% and in line with market expectations.

The US ISM manufacturing index strengthened to 58.6 for February from 57.6 the previous month and above consensus forecasts of 58.0. There was a slightly faster rate of production growth for the month and a stronger increase in the rate of growth in new orders. Employment increased at a slightly slower rate on the month while supply-side difficulties increased. Prices increased at only a slightly slower rate of growth for the month.

The dollar secured a tentative net advance after the data, although risk conditions had a larger impact. Market unease over the Ukraine situation gradually increased during the day. As confidence dipped further, the Euro came under sustained selling with a slide to lows below the 1.1100 level.

President Biden announced a ban on Russian flights to the US and overall risk sentiment remained fragile on Wednesday despite some support from China’s offer to act as a peacemaker. There were further concerns over the Euro-zone outlook and the risk of escalation in Ukraine with pressure for Western involvement. The Euro was held close to 1.1100 on Wednesday and failed to make significant headway as underlying tensions remained high.




US treasuries gained sharply ahead of Tuesday’s New York open with the 10-year yield declining to 1-month lows below 1.75%. Although there was a dip in prices after the US ISM data, there was still solid demand for bonds and yields remained at lower levels which sapped dollar support and it remained below the 115.00 level against the Japanese currency with the yen maintaining a firm tone on the crosses as equities remained under pressure.

Cleveland Fed President Mester stated that the Ukraine situation adds upside risk to inflation, but also puts some downside risks to the growth forecast. Wall Street equities remained on the defensive which sapped dollar support into the Wall Street close. Risk conditions attempted to stabilise on Wednesday, but overall sentiment remained fragile amid the Ukraine situation with the dollar trading just above the 115.00 level and the Euro below 128.00 as risk conditions dominated.




The UK manufacturing PMI index was revised to a final 58.0 for February from the flash reading of 57.3 and the strongest reading for seven months. Overall orders growth was strong, although exports were again disappointing. Pressure on costs and prices remained intense, although with a slight easing in the rate of increase.

UK mortgage approvals increased to 74,000 for January from 71,200 previously and comfortably above consensus forecasts of 72,000 with firm consumer borrowing.

Sterling initially held firm, but lost ground after the New York open as risk appetite deteriorated. There was also a fresh dip in interest rate expectations with money markets pricing in some doubts that there would be a rate hike at this month’s meeting with the probability weakening to around 90% which sapped Sterling support.

Sterling dipped to lows near 1.3300 against the dollar while the Euro recovered from intra-day lows.

Bank of England MPC member Saunders stated that the risks are on the side of stronger and more persistent inflation and that prompt tightening now could help limit the total scale of tightening that will be needed. He opposed running the economy hot and an increase in inflation expectations would be costly to reverse. He added that the Ukraine situation would complicate the situation. Fellow MPC member Mann stated that it was vital to curb inflation expectations. Hawkish rhetoric failed to trigger Sterling demand and risk appetite deteriorated. The UK currency dipped below 1.3300 against the dollar on Wednesday with the Euro above 0.8350.




The Swiss PMI manufacturing index edged lower to 62.6 for February from 63.8 the previous month and below expectations of 64.0. There was little impact from data releases with risk conditions tending to dominate. The Euro dipped sharply to fresh 6-year lows near 1.0200 as the Euro came under renewed pressure while the dollar was able to secure only a slight net advance. National Bank member Zurbruegg reiterated that the bank would keep intervening in markets to curb franc strength if necessary, but the dollar was held below the 0.9200 level as risk trends dominated with a strong underlying franc tone.


Technical Levels 



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