The US Dollar gathered strength against its rivals with the immediate reaction to inflation figures. At the time of press, the US Dollar Index was up 0.05% on the day at 102.40. Inflation in the US, as measured by the change in the Consumer Price Index (CPI), rose to 3.4% on a yearly basis in December, the US Bureau of Labor Statistics (BLS) reported on Thursday.

This reading followed the 3.1% increase recorded in November and came in stronger than the market expectation of 3.2%. On a monthly basis, the CPI rose 0.3%, compared to analysts' forecast of 0.2%.

EUR/USD - Spot remains well-supported on dips ahead of this morning’s US data reports, however. Comments from ECB officials this week have been relatively downbeat on Eurozone economic trends (implying stagnation at the end of last year) but there is no indication that policy makers are even close to easing policy at this point, given ECB staff expectations that inflation could edge higher in the early part of this year.

GBP/USD - Sterling is trading modestly higher against the USD on the day, in line with its core peers. Gains largely reflect positioning ahead of the US CPI, given the absence of any domestic fundamental developments. (November output data are out Friday)

USD/CAD - The CAD is little changed on the session, with spot continuing to respect the range parameters defined by Friday spot sings around the US NFP data. Pro[1]risk sentiment is helping lift the CAD somewhat (stocks are one of the more influential correlators with the CAD now) but the CAD still looks a bit stretched relative to our assessment of fair value. In the absence of any major domestic news or developments, external drivers—the broader USD tone, risk appetite—and technical factors will continue to drive the CAD.