The euro fell to one-week lows, putting it within arm’s reach of mid-­January lows, hit last week below 1.05 against its US peer. The dollar’s biggest rivals find it tough to compete when market conviction grows in the Fed raising interest rates, a move that would increase the buck’s yield advantage against its sub-zero yielding European counterpart. Adding to the euro’s headwinds, final purchasing managers’ indexes from the bloc’s two biggest economies, Germany and France, got revised lower.

Sterling

John Major and Tony Blair have formed an unlikely duo in an attempt to rally opposition scrutiny of UK Prime Minister Theresa May’s prosecution of the Brexit process and, in Blair’s case, the goal is an entire reversal of the EU divorce.

They are not alone in their condemnation of the Labour Party’s efforts to challenge May’s agenda. Other prominent figures such as former Chancellor of the Exchequer George Osborne have also voiced frustration with proceedings.

The lack of broader support to their efforts may be attributed to the rather positive economic performance of the UK economy since the EU Referendum, an outcome directly contradicting the views of most strident remain voters before the June ballot. Sterling neared six-week lows as the dollar rallied and British data offered evidence of an economy losing steam. Growth in Britain’s factor sector slowed more than expected to the lowest in three months in February. The more important PMI on services growth loomed yesterday and was also expected to slow. Signs of fissures forming in Britain’s economy, which has fared surprisingly resilient in the aftermath of last summer’s Brexit decision, would strengthen the argument for the Bank of England to leave its lending rates low for longer.

US dollar

With the US interest rate decision less than two weeks away, the number of Fed members publicly advocating for a rate hike has increased yet again.

The latest to voice her support is Federal Reserve Governor, Lael Brainard, who had previously advocated lower-for-longer but has now conceded that the current environment supports action ‘soon’. Based on market pricing, that ‘soon’ might occur at the conclusion of the March meeting (March 14-15). As a result, the US dollar has moved to key technical levels against both the euro and the sterling, each only just holding their ground against the move in US Treasury Yield spreads. A number of Fed speakers were due yesterday afternoon, including Janet Yellen, the Fed Chair, who may continue to voice support for a rate move only reinforcing the trend.