FOREX: DXY Extends March Higher, EURUSD Below Key Support
Mar-13 09:33
- Despite a steadier session for energy prices on Friday, expectations that the conflict in the Middle East could persist for longer than first thought are continuing to drive the dollar higher. This has prompted the USD index to extend weekly highs above he 100 mark, and notably narrowing the gap to the November highs for the index.
- There was a notable pop higher for USDJPY overnight, which saw the pair breach the bull trigger at 159.45. Session highs of 159.69 represent the highest traded levels since July 2024, and have prompted some further FX jawboning from officials in Japan. Finance Minister Satsuki Katayama told reporters on Friday that financial authorities are staying in closer contact with their US counterparts than usual, and that she would refrain from commenting on the topic of currency intervention.
- This has prompted a moderation for the pair back to 159.35, and has allowed the broader dollar strength to be concentrated against other majors within the G10. The likes of EUR, GBP, AUD and NZD are all trading with 0.5% declines today.
- For EURUSD, spot has notably traded back below 1.15, and downside momentum has gathered pace on a break of the November lows through 1.1469. The next notable target on the downside is at 1.1392, the Aug 2025 low.
- AUDUSD extends its reversal from this week’s cycle highs to 2% on Friday. Despite, expectations for an RBA rate hike this week being behind the Aussie’s resilience, spot remains sensitive to broader risk pullbacks. Key support for the pair remains further down at 0.6963, the 50-day EMA.
- ECB's Wunsch is unlikely to speak on monetary policy matters today as the ECB remains in its pre-decision quiet period. On data, we'll get Eurozone industrial production, Canada employment, US PCE, Michigan consumer expectations, and JOLTS.
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ECB: Negotiated Wage Growth Still Below 3% By End-26, Another Upward Revision
Feb-11 09:20
The ECB’s forward looking wage tracker continues to indicate negotiated wage growth of just below 3% by the end of this year. Note that at last week’s press conference, President Lagarde stressed that “the contribution to overall wage growth from payments over and above the negotiated wage component remains uncertain” – this followed the stronger-than-expected compensation per employee reading in Q4 2025.
- The wage tracker excluding one-off payments was 2.693% in the February updated, up from 2.681% in December.
- Note that upward revisions have become common in this series. For example, the Q2 2026 reading of 2.650% was 2.582% in December and 2.489% in October.
- From the ECB’s press release: “The rise in the wage path over the course of the year is related to the dissipation of the mechanical downward effect of large one-off payments that were made in 2024 but not in 2025. These mechanical effects are expected to virtually disappear over the course of 2026, and the wage trackers with one-off payments (smoothed and unsmoothed) and without one-off payments are expected to converge as such payments become less relevant. The ECB wage tracker also suggests that there is less dispersion in negotiated wage pressures across the different euro area countries in 2026 than in previous years.”
- “As new agreements are being signed and coverage of contracts reaching beyond 2026 is gradually increasing, the forward-looking horizon of the wage tracker will be extended to the first quarter of 2027 in the July 2026 data release.”
