Strong manufacturing surveys are expected to be released in the US, UK and EU. Currency markets will be driven by interest rate outlooks as investors look towards comments from Fed’s Ben Bernanke in the run-up to the European Central Bank monetary policy committee meeting. Currently the euro is finding support on the view that the ECB will tighten policy in front of the Fed.

Sterling

Several of the Bank of England’s MPC members will face testimony in front of the Treasury Committee Hearing over February’s inflation report. Markets will couple the comments with a manufacturing survey, and a strong manufacturing data will help support sterling, but a division among committee members on the course monetary policy should take, could help to offset any positive impact from PMI.

US Dollar

The dollar has taken back some of its losses. The manufacturing sector has been the main growth engine behind the current economic recovery. Instability in North Africa and the Middle East remains a factor, but considering that there were no new pressing developments, the dollar was able to trade higher on the improved manufacturing numbers.

Euro

The euro is finding support as investors look towards this week’s ECB MPC meeting. The expectations that Jean-Claude Trichet could sound more hawkish at this week’s press conference was temporarily put on hold after final HICP figures that came in at 2.3 per cent y/y, which was down from flash estimates of 2.4 per cent. The defeat of the leading party in Irish elections over the weekend had little to no immediate impact on the euro.

Japanese Yen

The yen suffered small losses on improved risk appetite, despite China PMI figures that came in at six-month lows.

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