Daily Currency Update

USD - US Dollar

The USD is showing a generally weak trend, but trading is quiet as the week begins. With no significant data releases today, the upcoming US CPI report is likely to keep market activity subdued. Currently, the DXY (Dollar Index) is trading near a level that reflects fair value influenced by interest rate differentials, meaning that future changes in short-term interest rates or other key factors will play a crucial role in determining the dollar's direction. The inflation data due tomorrow could significantly influence the short-term trajectory of the dollar. Market expectations are set for a 0.4% month-over-month increase in the Consumer Price Index (CPI) for February, which would maintain the annual inflation rate at 3.1%. Core inflation, which excludes volatile food and energy prices, is anticipated to rise by 0.3% month-over-month, potentially leading to a slight decrease in the core inflation rate to 3.7%.

CAD - Canadian Dollar

The CAD has stabilized below 1.35 after Canada's strong employment figures were released on Friday. The slight decrease in the US-Canada 2-year bond yield spread has contributed to the CAD’s recovery, but further advances seem unlikely at the moment, as the current exchange rate is very close to its perceived fair value of 1.3495. With only a few domestic reports scheduled for this week, including Manufacturing Sales, Housing Starts, and Wholesale Sales, all due later, the CAD’s movements are expected to be influenced more by external factors such as the USD, market trends, and technical aspects in the coming days. Observe USD/CAD trends.

EUR - Euro

The EUR is holding steadily above 1.09. ECB Governor Kazimir expressed a preference for postponing rate cut decisions until mid-year, stating that hastening such decisions would be neither "wise nor advantageous." As indications suggest that both the Federal Reserve and the European Central Bank are leaning towards easing policies in June, the EUR's potential to rise beyond 1.10 may be limited for the time being.

GBP - British Pound

Sterling remains relatively stable in today's trading session, with its value firmly maintained in the mid-1.28s, marking the highest level for the pound since last July. There were no significant data releases from the UK today. Employment and salary figures are expected tomorrow, but they are unlikely to change the outlook that the Bank of England may postpone any interest rate cuts until later in the year.