Better US data of late to the benefit of rate expectations has kept USD supported. OIS futures pricing improved markedly in the past week on the back of positive data releases and upgrades to Q1 growth expectations.
We have another slew of data releases in the coming week but currency upside remains capped amid unstable risk sentiment and dovish rhetoric from Fed officials ahead of the March FOMC.
The key US release is PCE inflation, which is expected to show weak month-onmonth changes. As the Fed expects inflation to run low in the near-term, the impact is likely to be limited.
Markets should also shrug off a downward revision to Q4 GDP as a solid rebound in Q1 is projected across current analyst estimates.
Looking ahead, a further improvement in domestic demand conditions should be supportive but the currency remains prone to risk-off, China- and oilrelated market moves.
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