GBP/USD managed to regain the 1.2000 level.

The US ISM non-manufacturing PMI index declined marginally to 55.1 for February from 55.2 the previous month, but above consensus forecasts of 54.5. There was a slowdown in business activity for the month while new orders increased at a faster rate on the month.

There was a stronger rate of growth in employment for the month while supply constraints eased slightly and the prices index retreated slightly to 65.6 from 67.8 previously. Although this was the lowest reading for two years, the overall rate of increase was still relatively high in historic terms.

San Francisco Fed President Daly stated that the central bank would adjust the rate path higher and longer if the next inflation data is hot and further tightening will probably be necessary, but she added that anecdotes from business leaders suggest inflation is slowing more than recent data suggests.

Treasuries managed to regain some ground on Friday with the 10-year yield retreating back below 4.00%.

Wall Street indices managed to make gains on Friday despite persistent concerns over inflation and Fed tightening with some relief that yields edged lower.

Overall risk appetite held firm amid relief over US trends.

The slight decline in US yields and net gains in equities limited demand for US dollar on Friday and the currency index drifted lower.

The Reserve Bank of Australia will announce its latest interest rate decision on Tuesday. Consensus forecasts are for a further 25 basis-point rate hike to 3.60%.

Forward guidance will inevitably be an important element.

Federal Reserve Chair Powell will testify to Congress on Tuesday with the comments extremely important for underlying Federal Reserve expectations and market sentiment.

The Euro drifted lower for much of Friday, but there was net support from the performance in equities. The dollar also failed to hold gains after the US data releases and gradually lost ground. US yields edged lower and EUR/USD was able to rebound to 1.0635 late in US trading. EUR/USD edged higher to 1.0640 on Monday.

Yield trends tended to dominate the yen during the day. USD/JPY peaked around 136.40 before a retreat to lows around 135.75 with the dollar trading around 135.70 on Friday.

The Swiss franc edged stronger on the day. EUR/CHF retreated to near 0.9950 with USD/CHF dipping to 0.9360. EUR/CHF edged higher to 0.9970 on Monday ahead of the inflation data.

Sterling gained net support during the day with some relief as Wall Street equities made headway. A slight upward revision to the PMI services data also underpinned the Pound. GBP/USD managed to regain the 1.2000 level and secured a net gain to 1.2035.

Commodity currencies regained ground as Wall Street posted gains. AUD/USD settled just below 0.6770 before a retreat to 0.6755 on Monday. USD/CAD traded just below the 1.3600 level as oil prices rallied strongly.