Fed Powell testimony Tuesday.

The Euro-Zone Sentix investor confidence index dipped to -11.1 for March from -8.0 the previous month and contrary to expectations of a further limited net advance to -6.3.

According to Sentix, after several months of improvement in investors’ assessments of the economic situation and expectations, there was a new headwind for economic development at the beginning of March.

Despite the slightly weaker than expected data, the Euro posted net gains during the day.

The dollar was unable to make headway on Monday and the currency index drifted lower, primarily under the influence of a stronger EUR/USD rate.

Japanese cash labour earnings increased 0.8% in the year to January compared with expectations of 1.8%. The subdued data dampened expectations of Bank of Japan tightening.

The UK PMI construction index strengthened to a 9-month high of 54.6 for February from 48.4 the previous month and well above consensus forecasts of 49.1.

Overall business confidence continued to recover from the 31-month lows recorded in December.

There was a further easing of supply-side difficulties for the month while upward pressure on costs declined to the lowest level since November 2020.

The Reserve Bank of Australia increased interest rates by 25 basis points to 3.60% which was in line with consensus forecasts.

There was a slight shift in forward guidance with the bank still expecting further rate hikes, but also suggesting that the timing was more uncertain.

Federal Reserve Chair Powell will testify to Congress on Tuesday and Wednesday with an appearance before the Senate banking committee on Tuesday.

Although the prepared statement may be released ahead of the event, Powell’s rhetoric will still be extremely important for underlying Federal Reserve expectations and overall market sentiment.

The Euro was resilient during Monday despite slightly weaker than expected Euro-Zone business confidence data. The Euro gained support from drifted lower for much of Friday, but there was net support from the performance in equities. EUR/USD advanced to highs at 1.0695 before a slight correction and traded around 1.0685 on Tuesday. The dollar gained only limited support from higher yields.

The yen overall was held in relatively narrow ranges and USD/JPY settled around 136.00.

Stronger than expected Swiss inflation underpinned the Swiss currency. EUR/CHF dipped below the 0.9950 level with USD/CHF sliding to lows just below 0.9300.

Sterling lost ground during Monday with no support from the stronger than expected construction data. GBP/USD did manage to hold just above 1.2000 and traded around 1.2050 with a slightly firmer tone.

Commodity currencies overall lost ground on Monday, but edged higher from intra-day lows. USD/CAD settled around 1.3615 with slight protection from fresh gains in oil prices. AUD/USD settled around 0.6735 on Monday. The Australian dollar dipped after the RBA rate decision and AUD/USD traded close to 0.6700 amid the marginal shift in forward guidance.

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