The USD would recover from being down 0.4% ahead of yesterday’s North American open, climbing back to flat on the day by the end of the session. Initial and continuing jobless claims data beat expectations, while manufacturing activity surged to its highest pace since September of 2022. Philadelphia Fed President Harker said that it will likely be appropriate to cut interest rates this year but emphasized the risks of easing policy too soon. The USD enters today’s North American session slightly lower.

EUR/USD ended yesterday flat, as did most of the G10 space, after being up as much as 0.65%. Yesterday’s ECB meeting minutes release highlighted The Governing Council’s focus on wage growth and its impact on rate cut timing. Risks of cutting policy rates too early were seen as outweighing that of cutting rates too late. Germany’ final Q4 GDP came in as expected, -0.3% q/q annualized. The ECB’s Schnabel gives a speech today titled "Has the fight against inflation been won?"

GBP/USD rose 0.2% yesterday and is 0.2% higher today after yesterday’s robust PMI data highlighted the divergence between the UK and EU economies. Echoing similar Fed and ECB speaker sentiment of late, Bank of England policymaker Greene said she wants more evidence that inflation is becoming less rooted before she will back monetary easing.

USD/CAD fell 0.15% yesterday and another 0.1% today as the Canadian Dollar heads for its 3rd straight daily gain. Retail sales data outperformed elevated expectations yesterday, bolstering expectations that Canada avoided a technical recession in Q4. Q4 GDP data is released Thursday February 29th.

USD/MXN gained 0.4% yesterday and is 0.1% lower today, while USD/BRL has added nearly 0.4% today after yesterday’s 0.75% gain. Crude and copper price weakness are weighing on Latin American currencies. The Mexican central bank will update economic projections and give a more detailed analysis of the monetary policy outlook with the release of its quarterly inflation report on Wednesday. Many emerging market currencies are currently experiencing declining volatility conditions.