The dollar is trading higher against its G10 members ahead of today’s US PCE data release. Equities futures are trading lower with the S&P 500 on track for a weekly loss. US yields are up across the board as central bank speakers continued to echo the recent consensus on policy, suggesting that rate cuts are likely to happen, but not yet. Congressional leaders agreed a deal yesterday to avoid a partial government shutdown that would have started after March 1.

The focus today was on the US PCE inflation data which is the measure of inflation that the Fed officially targets. Our US economists are expecting core PCE to come in at +0.36% MoM, which if realized would be the strongest monthly print since another +0.36% MoM reading in February last year. The data came in line with expectations. DB

EUR/USD - The EUR managed a solid rebound from the dollar and is trading higher against its G10 members ahead of today’s US PCE data release. Equities futures are trading lower with the S&P 500 on track for a weekly loss. US yields are up across the board as central bank speakers continued to echo the recent consensus on policy, suggesting that rate cuts are likely to happen, but not yet. Congressional leaders agreed a deal yesterday to avoid a partial government shutdown that would have started after March 1.

GBP/USD - UK lending data for January were a little firmer than forecast. Net Consumer Credit rose GBP1.9bn last month while Mortgage Approvals rose 55.2k, versus 52k expected. The data did little for the pound, however, and spot remains rather flat.

USD/CAD - The CAD is a relative underperformer on the day, but losses are minimal in rather quiet, month-end trade so far. TSX stocks have underperformed US markets through February, suggesting that passive hedge rebalancing flows may be mildly CAD supportive, if anything, but the sharp widening in US/Canada spreads over the second half of the month remains a drag on the CAD’s broader outlook.

Canada releases December and Q4 GDP data at 8.30ET. Industry-level output is expected to rise 0.2% (Scotia at +0.3%) and gain 1.6% over the year. The street is looking for a 0.8% (SAAR) gain in Q4 GDP (scotia a bit lower than the consensus here at +0.6%). Positive GDP growth over the quarter will mean Canada skirts a recession (after Q3’s –1.1%) and bolster expectations that the BoC is unlikely to rush into rate cuts while inflation risks remain. That could give the CAD a mild lift, at least.SB