Forex News

ING strategists Ewa Manthey and Warren Patterson say Copper prices on the LME are retreating after Monday’s rally that followed a temporary pause in US strike plans on Iran. Tehran’s denial of talks has weighed on sentiment, but the roughly 10% monthly drop has attracted renewed Chinese demand, with Mysteel data showing the largest weekly inventory draw of the year.

LME prices ease but inventories draw down

"Copper prices on the LME fell around 1% this morning, giving back part of Monday’s rally after President Trump announced a temporary pause in planned US strikes on Iran’s energy infrastructure."

"The renewed decline followed Tehran’s denial of any ongoing negotiations."

"Copper is down around 10% this month, though the pullback has attracted renewed Chinese buying."

"Mysteel data shows inventories fell by 78,700 tonnes last week to 486,200 tonnes – the largest weekly draw this year – highlighting improving physical offtake after the recent correction."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

• EUR/GBP holds steady as Eurozone and UK activity slows.
• Eurozone services sector drags overall activity despite a rebound in manufacturing.
• UK PMI data also weakened, reinforcing signs of a broader slowdown in activity

EUR/GBP trades around 0.8650 on Tuesday, holding steady on the day as investors digest a series of weaker-than-expected activity releases in both the Eurozone and the United Kingdom (UK), pointing to a clear slowdown in growth.

In the Eurozone, the preliminary HCOB Composite Purchasing Managers Index (PMI) fell to 50.5 in March from 51.9 in February, below market expectations. The decline is mainly driven by a sharp slowdown in the services sector, with the index dropping to 50.1. Meanwhile, the manufacturing sector shows signs of improvement, rising to 51.4 and indicating a partial recovery in industrial activity.

Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, noted that the data is raising stagflation concerns, as the war in the Middle East drives a sharp increase in energy prices and disrupts supply chains. Supplier delivery times are lengthening significantly, while firms’ costs are rising at their fastest pace in more than three years.

In the United Kingdom, the trend is similar. The S&P Global Composite PMI declined to 51 in March from 53.7 previously, weighed down by a slowdown in both services and manufacturing activity. The drop is particularly pronounced in the services sector, which fell to 51.2 from 53.9, highlighting a significant loss of demand momentum.

According to TD Securities analysts, this deterioration comes in an environment of intensifying cost pressures, notably due to higher energy prices and ongoing supply disruptions. They also expect UK inflation to remain steady at 3% YoY in February, before potentially rising in the coming months as the energy shock increasingly feeds through into the data.

Market focus now shifts to speeches from European Central Bank (ECB) officials later in the day, as well as UK inflation data due on Wednesday, which could provide further guidance on the policy outlook and drive the next move in EUR/GBP.

• US private employers added an average of 10K jobs per week in early March.
• Job gains gain some momentum, reversing the previous week’s drop.

Private-sector hiring in the US appears to have regained a bit of momentum early in March. According to the NER Pulse, the weekly companion to the ADP National Employment Report, companies added an average of 10K jobs per week in the four weeks through March 7.

That marks a small uptick from the prior reading, hinting that the recent improvement in hiring may be picking up pace again.

The focus now shifts to the usual weekly labour market data on Thursday, which should help determine whether this uptick is temporary or a sign that the broader US jobs backdrop is once again gathering steam.

BNY's Head of Markets Macro Strategy Bob Savage relays comments from RBNZ Governor Anna Breman, who expects the Middle East conflict to lift near‑term headline inflation and weaken New Zealand’s growth momentum. Breman stresses risks to global financial stability but notes domestic banks’ resilience and signals no rush to hike rates, with the Monetary Policy Committee focused on avoiding policy mistakes while keeping inflation low and stable over the medium term.

RBNZ flags risks, stays patient

"RBNZ Governor Anna Breman has highlighted the impact of the Middle East conflict on New Zealand’s economy, expecting higher near-term headline inflation and weaker growth momentum."

"She acknowledged the risks to global financial stability that could affect New Zealand banks but noted their resilience thanks to strong capital and liquidity buffers, signaling that RBNZ will not rush to raise rates."

"The Monetary Policy Committee will carefully assess the appropriate response to avoid premature or delayed actions, aiming to prevent temporary inflation spikes from becoming entrenched."

"The focus remains on delivering low and stable inflation over the medium term to support New Zealanders’ wellbeing."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

European Central Bank policymaker Olaf Sleijpen said on Tuesday that the rising energy prices are likely to become entrenched in wider economy more quickly than they did during the 2022 energy crisis, as reported by Reuters.

"We can't control oil and gas prices, but we can act if we see second-round effects. I think we will have more information on that front in April," Sleijpen added.

Market reaction

These comments failed to trigger a noticeable market reaction in EUR/USD. At the time of press, the pair was down 0.2% on the day at 1.1588.

Societe Generale analysts say EUR/HUF’s February decline stalled near 374 before a sharp rebound toward 400, with the 50‑DMA at 383/381 acting as key support. They expect possible consolidation between 383 and 396, warning that a break below support could revive the broader downtrend. The bank also links Hungary’s oil sensitivity and upcoming elections to forint prospects.

Key 383/381 support and 420 risk

"In CEEMEA, we expect the National Bank of Hungary to leave the policy rate unchanged at 6.25% today. Hungary’s vulnerability to the oil shock argues against further easing by the monetary authorities. This comes even as headline inflation slowed sharply to 1.4% in February, well below the MNB target rate of 2-4%."

"Elevated geopolitical uncertainty means we now look for an extended period of policy stability. The MNB estimates that a 10% rise in oil prices adds roughly 0.3–0.4pp to headline CPI through both direct and indirect channels, around double the estimated impact for the eurozone."

"Given the low starting point, such an increase would still keep inflation within the tolerance band. Our updated forecasts are for a gradual rise towards 4% by December, assuming oil prices ease back in the coming weeks. However, if crude remains above $100/bbl, inflation could shoot up to 5% by end-2026."

"A squeeze in EUR/HUF towards 420 may compel the MNB to tighten in the near term. On the political front, a market-friendly election outcome next month would likely deflate EUR/HUF toward the 370 area from around 390 currently. We remain constructive on forint and local HUF bonds."

"EUR/HUF decline stalled near 374 in February, and the pair has since staged a sharp rebound. It recently registered an interim high near 400. It will be important to observe whether the pair can form a base and attempt a more sustained reversal. The 50-DMA near 383/381 serves as short‑term support zone. A brief consolidation cannot be ruled out within the limits of 383 and the peak reached earlier this week at 396. If the pair fails to hold above 383/381, the downtrend could resume."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)