Foreign Exchange Market Update

February 21, 2025

United States (U.S.): Consumer Sentiment Plunges to Lowest Level Since November 2023

A report released by the University of Michigan on Friday showed that consumer sentiment in the U.S. deteriorated by much more than previously estimated in February. The University of Michigan said its consumer sentiment index for February was downwardly revised to 64.7 from a preliminary reading of 67.8. Economists had expected the index to be unrevised. With the unexpected downward revision, the consumer sentiment index is well below the January reading of 71.7, tumbling to its lowest level since hitting 61.3 in November 2023. The substantial deterioration by consumer sentiment came amid a surge in year-ahead inflation expectations, which spiked to 4.3% in February from 3.3% in January, reaching the highest level since November 2023. Long-run inflation expectations also rose to 3.5% in February from 3.2% in January, reflecting the largest month-over-month increase since May 2021. 02/21/2025 - 10:32:00 (RTTNews)

United Kingdom (U.K.): Retail Sales Growth At 8-Month High

British Pound traded at 1.2646 against USD at 9:00 AM PST.

U.K. retail sales expanded at the fastest pace in eight months in January due to the rebound in food store sales volume, the Office for National Statistics. Retail sales volume increased 1.7% in January from December. The monthly growth confounded a revised fall of 0.6% in December. This was the first increase in five months and was stronger than the expected growth of 0.4%. Food store sales advanced 5.6%, marking the biggest monthly growth since March 2020. By contrast, non-food sales edged down 1.3% and auto fuel sales were down 1.2%. Excluding auto fuel, retail sales registered a monthly rise of 2.1%, reversing a 0.9% decrease in December, data showed. Sales were forecast to grow 0.9%. Yearly, retail sales growth softened to 1.0% in January from 2.8% in December. Economists forecast sales to log a weaker growth of 0.6%. Excluding auto fuel, retail sales grew at a slower pace of 1.2% annually after rising 2.1% in the previous month. Elsewhere, survey data from the market research group GfK showed that British consumer sentiment rose moderately in February. The consumer sentiment index gained two points to -20. 02/21/2025 - 03:29:00 (RTTNews)

European Union (E.U.): Eurozone Private Sector Expands in February

Euro traded at 1.0456 against USD at 9:00 AM PST.

The euro area private sector managed to grow for the second month in February with the deepening contraction in France being offset by a moderate rebound in Germany, flash data from the purchasing managers' survey by S&P Global showed. The flash composite output index remained unchanged at 50.2 in February. Economists forecast the indicator to rise to 50.5. A reading above 50.0 indicates expansion. In January, the private sector output increased for the first time in five months and the latest data signaled a sustained but marginal growth in February. The main source of growth was the service sector where activity increased for the third month but at the weakest extent in the current sequence. 

Meanwhile, manufacturing production continued to fall in February. The services Purchasing Managers' Index fell unexpectedly to 50.7 in February from 51.3 the previous month. The reading was seen at 51.5. At 47.3, the manufacturing PMI rose to a nine-month high from 46.6 in January. The score was forecast to rise to 46.9. New orders decreased for the ninth month and the pace of decline was sharper than in January. New business from abroad also decreased in February. Employment fell at a faster pace in February. Staffing levels decreased as a marked reduction in manufacturing workforce numbers outweighed a slight rise in services employment.

The pace of input cost inflation accelerated at the fastest pace since April 2023. The increase was driven by services, where the rapid pace of growth was unchanged from January. Manufacturing input prices climbed the most in six months but at a moderate pace. Output price inflation accelerated to a ten-month high. 

A strong growth in charges in the service sector contrasted with a marginal fall in manufacturing selling prices. Manufacturers continued to lower their purchasing activity, in response to weak customer demand. A slower drop in stocks of purchases was also recorded. Suppliers' delivery times shrank for the first time in six months due to muted demand for inputs. Companies continued to forecast growth over the coming year but optimism dipped to a three-month low. Sentiment weakened across manufacturing and services. 02/21/2025 - 07:59:00 (RTTNews)

Mexico: Q4 GDP Growth Eases More Than Estimated

Mexican Peso traded at 20.3359 against USD at 9:00 AM PST.

Mexico's economic growth eased slightly more than initially estimated in the fourth quarter, the latest data from the National Institute of Statistics and Geography, or INEGI, showed. GDP advanced an unadjusted 0.5% YoY in the December quarter versus a revised 1.7% growth in the September quarter. In the flash estimate, the rate of expansion was 0.6%. The slowdown in growth was largely due to a 4.0% renewed contraction in the primary sector. Secondary activity also shrank by 2.0%, while the tertiary sector growth eased slightly to 2.1% from 2.2%. On a seasonally adjusted basis, GDP dropped 0.6% in the fourth quarter, as estimated, after rising 0.9% in the third quarter. During the year 2024, the Mexican economy grew 1.2% compared to 2023, revised down from 1.3%. 02/21/2025 - 07:31:00 (RTTNews)