The U.S. dollar posted strong gains on the day as commodities such as gold and silver continued to extend the declines.
China announced that it was targeting a GDP growth rate of 6.0-6.5% for 2019. It raised the budget deficit to 2.8% from 2.6% last year, while announcing fiscal easing measures. These included planned tax cuts and infrastructure spending.
On the economic front, the eurozone services PMI rebounded sharply in February. Services activity rose to a four-month high to 52.8 in February. This surpassed the initial flash estimates of 52.3.
The gains came with Italian and French services PMI posting results that were stronger than expected. Retail sales also remained in line with expectations, rising 1.3% following a 1.4% decline previously.
In the UK, the services sector activity rose to 51.3 after falling to 50.3 in January.
The U.S. ISM non-manufacturing PMI came in at 59.7, beating estimates of 57.4. It marked a one-year high. Meanwhile, IHS Markit’s services PMI also rose to a seven-month high.
New home sales report for December showed a strong increase, rising 3.7% on the month to a seasonally adjusted 621,000. The median estimates called for a decline to 605,000. On a yearly basis, new home sales were down 2.4% compared to the same period the year before.
The European trading session is relatively quiet. The NY trading session starts off with Canada’s trade balance figures and labor productivity data.
The Central Banks
Following the RBA’s decision to leave interest rates unchanged yesterday, the quarterly GDP report was released this morning during the Asian trading session. The fourth quarter GDP in Australia rose by 0.2%. Economists forecast that GDP would increase by 0.5% during the quarter, up from 0.3% from the previous quarter.
The BoC will be holding its monetary policy meeting later in the day. We can expect no changes, as the BoC will keep interest rates held at 1.75%. Canada’s Ivey PMI report is due following the BoC meeting.
Fed members, Williams and Saunders, are due to speak later in the evening. The speeches come ahead of the Fed meeting due later in the month.
