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The week commenced with disappointing US economic data. Retail sales figures fell short of expectations, heightening concerns about weakening consumer activity. Geopolitical events take center stage today as discussions between Trump and Putin regarding a potential ceasefire are anticipated. In Germany, the parliament is expected to approve a fiscal stimulus package, potentially boosting the ZEW economic sentiment index.
USD: Increasing Concern on Consumer Confidence
The US dollar continues to be weighed down by unfavorable domestic data, experiencing declines against most G10 currencies, except the Japanese yen. Retail sales in February showed a modest increase (0.2% month-on-month), falling short of the anticipated 0.6%. Additionally, the Empire Manufacturing Index reached its lowest point in over a year.
Despite the discouraging data, equities performed well, although underlying fragility remains. The US administration has suggested a willingness to accept a recession as a necessary consequence of restructuring trade relationships. The Federal Reserve, scheduled to announce rates soon, appears limited in its ability to alleviate risk sentiment due to persistent inflation expectations.
Today’s economic calendar offers limited data points that could influence the dollar. Industrial production figures for February and housing starts data will be of interest. Further downside pressure on the dollar could arise from the Trump-Putin discussion regarding Ukraine.
