EUR/USD

Spot is up 0.7% on the day and now back to flat on the week after losing as much as 1.2% from last Friday’s close. German January CPI came in +8.7% YoY, 0.2% better than expected, helping risk rally. While this would in theory, be dovish for ECB rate policy, considering the basis between German CPI and the ECB Deposit Facility Rate is still over 600bps, the hawkish commentary by numerous ECB officials since last week’s rate decision seems plenty warranted.

USD/CAD

Spot is 0.5% lower on the day, fully reversing yesterday’s move higher and then some. The first-ever Bank of Canada minutes released yesterday showed a debate as to whether to hold or hike at the last meeting, the former prevailing. While the minutes showed there was no dissent at the meeting, the structure of the BoC is that all decisions are made by consensus, not vote. The BoC members mentioned that while this pause does not rule out hikes in the future, a “wait and see” approach was appropriate for the time being, given recent drops in inflation.

GBP/USD

Spot is up 1% overnight, one of the largest movers in the G10 space. Bank of England Governor Andrew Bailey made comments in Parliament addressing the public sector strikes occurring around the country in recent weeks. Those striking are demanding increases in pay to combat inflation, and Governor Bailey testified that any increases in public sector pay would worsen inflation unless taxes were increased to offset.

USD/BRL

While most currencies are stronger against the USD today, BRL's weakness shows no sign of stopping, with the pair up another 0.6% today. While another measure of inflation came in lower than expected today and a member of President Lula da Silva’s cabinet said the administration will respect central bank autonomy, discussions surrounding a re-evaluation of the country’s inflation targets spooked investors.

USD/MXN

Spot has been in a 0.5% range overnight, now closer to flat. CPI came in right at expectations at +7.91% YoY, an increase from the last reading of +7.82%. All eyes will be on the Banxico rate decision at 2 pm EST today for an indication of their forward rate path. The consensus is for a 25bp hike to 10.75%