USD

The latest FOMC minutes did little to inspire positive market sentiment on the day, with nearly all members agreeing to the 25bps hike. However, a couple of obvious candidates voted for a bigger 50bps move. Whilst some intra-day volatility was generated immediately after the release, the stale nature of the minutes limited moves to an extent, given the raft of surging US data that has been released over the last couple of weeks. This morning we get the second estimate of US Q4 growth, which is expected to be around a solid 2.9%. The recent trend of dollar strength also continued unabated through yesterday, with the DXY up another 0.25%.

 

EUR

The latest regional CPI was released a little earlier this morning, highlighting underlying harmonized inflation hit a marginal new record during January, rising to 5.3% from 5.2%. Markets had not been expecting the increase. The news is likely to give the hawks within the ECB more confidence, further underpinning an expected 50bps hike at the forthcoming ECB meeting. As for the single currency, well EUR/USD remains depressed, slipping a further 0.15% on the news.

 

GBP

Having rallied over the previous day on the back of that stronger UK PMI report, coupled with news of higher tax revenues boosting the government’s coffers, the pound succumbed to the surging dollar yesterday, with GBP/USD slipping 0.5% and unwinding most of the previous day’s gains. The broader pound has fared far better, however, with the likes of GBP/EUR and GBP/CAD more or less retaining the recent rally from earlier in the week.

 

JPY

Movement amongst USD/JPY has slowed to a snail’s pace over the past day, with the pair flatlining as we approach the key Japanese inflation report, which is due overnight. The latest estimates predict annual headline inflation to surge from 4 to around 4.5%, which, if proven, could put the BoJ under increasing pressure to expedite adjustments to their YCC policy.

 

CAD

Oil declined to its lowest level for over two weeks yesterday as investor worries over weaker demand intensified, given the backdrop of potentially higher terminal interest rates. That move has partly helped to fuel a weaker Loonie, with USD/CAD rallying another 0.2% on the day, further cementing solid gains over the past week.

 

MXN

USD/MXN continues to grab the headlines amongst EM currencies, given the recent move to a 5-year low (MXN high). The move has continued over the past day, with the pair moving around 0.65% lower in the past 24 hours, confirming another multi-year low in the process.

BRL

USD/BRL had a quiet session yesterday, and despite the dollar attempting to move higher, the pair closed the session pretty much at the open.

CNY

USD/CNY rallied another 0.23%, pushing the dollar to high’s not witnessed since the turn of the year.