In February, durable goods orders in the United States, excluding transportation, increased by 0.7%, surpassing the forecast of 0.2%. This uptick reflects stronger economic activity.
The EUR/USD pair tested lows around 1.0740, influenced by a robust US dollar and concerns over potential tariffs on EU imports. Meanwhile, gold prices have remained stable above $3,000, supported by positive trends in broader commodities.
Uk Services Sector Inflation
The UK services sector showed a slight increase in inflation, attributed to the upcoming rise in employer National Insurance. This trend may lead to three more rate cuts by the Bank of England later this year.
With durable goods orders in the US growing at a stronger pace than anticipated, we see evidence that economic momentum is still intact. A 0.7% rise, compared to the expected 0.2%, indicates that businesses continue to invest, likely buoyed by robust demand. This sort of data fuels confidence in the resilience of the economy, which often translates into support for the dollar.
This strength has been clear in currency markets. The euro slipped lower against the dollar, reaching around 1.0740, as traders responded to both the US data and concerns about trade measures. Washington has been weighing tariffs on European imports, a situation that could weigh on sentiment toward the euro in the coming weeks. Such uncertainty makes it harder for buyers to step in with confidence, leaving further losses on the table if no relief emerges.
Commodities, in contrast, saw stability. Gold has managed to hold its ground above the $3,000 threshold. While strength in the dollar can sometimes dampen demand for the metal, it seems broader optimism in commodities has provided enough support. The fact that gold remains firm despite economic resilience suggests investors are not rushing away from safe-haven assets, implying some caution in markets.
Market Considerations And Outlook
Meanwhile, the UK services sector is contending with rising cost pressures. The upcoming increase in employer National Insurance has been identified as a factor behind a small uptick in inflation measures. If this results in a sustained trend, it strengthens the case for additional interest rate reductions by policymakers. Markets are already positioning for three cuts before the end of the year, and if inflation data remains restrained, those expectations are unlikely to shift.
For those navigating these markets, recent developments highlight the need for a close watch on incoming data and central bank signals. The persistence of strong US figures, uncertainty around trade policies, and signs of change in UK price pressures all have the potential to sway positions. As a result, adjustments may be needed to account for further dollar strength, shifting interest rate expectations, and commodity price stability.
