PMI Shows Chinese Manufacturing in Contraction

Yearly CPI estimates from the Eurozone released yesterday showed a deceleration to -0.20% in February, compared to a 0.30% increase in January. On a monthly basis, inflation rose a meager 0.10% with four major economies in the Eurozone recording negative inflation rates. Core Eurozone CPI was 0.70%, lower than estimates and sparking concerns in the ECB. However, the recent rally in oil prices could help in stabilizing short term inflation rates if they are maintained. The ECB is likely to announce further easing in March with markets pricing in a -0.10% rate cut while monthly bond purchases are expected to increase by €10 billion. The currency continued to slide against the Dollar yesterday and maintains its bearish movement, drifting lower towards the 1.0500 handle.

The Reserve Bank of Australia left interest rates unchanged at 2.00% at its monetary policy meeting today. In the statement, the bank noted it would keep monetary policy accomodative and that low interest rates would help spur demand. The announcement also kept the door open for more policy changes after a thorough assessment of the Australian labour market and continued monitoring of inflation. Last month's unemployment data saw the rate spike to 6.00% following a few months of decline to 5.80%, increasing the uncertainty in the jobs markets. Australia's quarterly inflation was at 0.40% and 0.60% on average. AUDUSD is currently trading lower at 0.7129 following the bank’s statement.