The Dollar Index found crucial support at the 100 level, marking a significant turning point. It continued to perform positively throughout the entire month
In US employment, there was promising news as non-farm payrolls data exceeded expectations, reaching 216K, and maintaining the unemployment rate at a steady 3.7%. However, the ISM non-manufacturing PMI data fell short of expectations, although it still registered at 50.6, above the critical 50 threshold. Average hourly earnings also exceeded expectations at 0.4%. Meanwhile, US inflation surged to 3.4%, surpassing forecasts. Gross domestic product (GDP) showed robust growth, expanding by 3.3% both quarteron- quarter and in the fourth quarter, beating expectations.
Furthermore, core retail sales data exceeded both predictions and previous levels, positively impacting the service sector, with services PMI reaching 51.4, surpassing expectations. ISM manufacturing purchasing PMI data also indicated growth at 47.4.
ECB maintains policy rate
The Euro-USD exchange rate faced resistance at the critical 1.1010 level, causing it to dip towards 1.08. The European Central Bank (ECB) maintained its policy rate at 4.50%, even as regional inflation rose to 2.9%, meeting expectations. In Germany, the economic powerhouse of the European Union, inflation matched expectations at 3.7%.
In the UK, monthly economic growth exceeded expectations at 0.3%, with unemployment remaining steady at 4.2%. However, UK inflation surged beyond expectations, reaching 4%. The GBP-USD exchange rate maintained a stable course, averaging at 1.27.
China growth in focus in Asian markets
Turning to Asian markets, China’s Caixin Manufacturing Purchasing Managers Index (PMI) exceeded expectations at 50.8, while CPI in China surprisingly decreased by -0.3%. Although China’s GDP grew by 5.2%, it fell short of expectations, and the unemployment rate reached 5.1%. A notable surge in industrial production buoyed Asian markets, with industrial production growing by 6.8%. The People’s Bank of China (PBOC) left its lowest loan interest rate unchanged at 3.45%.
Central Bank rate decision affects domestic markets
In the domestic markets, the Central Bank of the Republic of Türkiye (CBRT) made a significant move by increasing the policy rate by 250 basis points to 45%. Inflation data, however, showed an increase lower than anticipated at 64.77%. Industrial production data lagged at 0.2%, below previous levels, and the unemployment rate ticked up slightly to 9%. Retail sales data indicated a significant annual decrease of 12.8%. The Borsa Istanbul continued its quest for equilibrium within the 7200-8200 range, while the Dollar to Turkish Lira exchange rate remained relatively stable above the 30 level.
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