Daily Currency Update

USD - US Dollar

Yesterday, comments by Federal Reserve's Waller, showing optimism, pressured the USD, while his colleague Bowman was more reserved. Markets now expect the Fed's current cycle to end, focusing on potential rate cuts, with a 25 basis point cut likely in the May FOMC. US yields have notably dropped this week, with 10-year yields decreasing by over 50 basis points. Despite a slight rebound, the USD is mixed but mostly stronger. More Fed insights are expected today with the Beige Book's release. US data today includes Wholesale Inventories and revised Q3 GDP, with no significant changes expected. GDP growth might increase slightly to 5.0%, with core PCE deflator steady at 2.4%, and inventories predicted to rise by 0.2%.

CAD - Canadian Dollar

The CAD has somewhat weakened in this session. Early gains by the USD in the mid-1.35 range during Asian trade were steadily reversed overnight, yet the CAD finds support in stronger equity markets and rising crude oil prices. The CAD's movements are primarily influenced by the overall strength of the USD. Canada is set to release its Q3 current account data at 8.30ET. Observe USD/CAD trends.

EUR - Euro

November's German state CPI data indicates a greater-than-expected slowdown in German inflation. National data, expected at 8ET, predicts a 0.1% decrease in CPI this month and a yearly inflation rate reduction to 3.5% from 3.8%. However, state data significantly undershot estimates, suggesting potential downward revisions in national figures. This slowing inflation trend may impact the EUR, but narrowing short-term spreads since November suggest markets anticipate the Fed to initiate rate cuts sooner.

GBP - British Pound

In the UK, October's borrowing data showed a slight, but not as significant as anticipated, decline in credit demand. Mortgage lending decreased by GBP 0.1 billion, but mortgage approvals unexpectedly increased to 47.4k. Sterling has weakened in this session, but the decline is only marginal compared to its close on Tuesday.