Daily Currency Update

USD - US Dollar

The USD is mixed in subdued trading, with minor dips in core majors lifting the DXY slightly, amid stable overall market activity. Stocks are mostly up, major bonds down, with crude stable and metals slightly down. The USD is strong for the day and week, with generally bullish momentum, but there are emerging signs of weakening technicals for the DXY, hinting at a potential shift in market sentiment towards the USD after its early-year gains. For further gains, the USD may need more support from rising yields or stronger data, especially as the DXY seems somewhat overvalued given recent spread changes.

CAD - Canadian Dollar

The CAD is little changed this morning, unaffected by the broader USD trend or movements in other commodities and assets, as the market awaits the January jobs report. Expectations are set for a 15k increase in jobs and a slight rise in the unemployment rate to 5.9%. Focus will be on wage data, anticipated to slow to 5.3% Y/Y, which, despite being a sign of moderation, still exceeds levels comfortable for the BoC regarding inflation control. Strong wage figures could shield the CAD from potential impacts of disappointing job growth. Observe USD/CAD trends.

EUR - Euro

Spot is slightly down but stays within the week's range, with gains limited in the upper 1.07s. German January CPI is confirmed at 2.9% annually. ECB Governor Kazaks indicated that despite a sharp inflation drop, expectations for a spring rate cut are premature, while Holzmann maintained a hawkish stance, suggesting rate cuts could be delayed to late this year, if they occur at all.

GBP - British Pound

The GBP has slightly weakened today but stays above 1.26. BoE's Haskel stated that he needs more proof of declining inflation to alter his position, having previously advocated for a rate hike. Market expectations for BoE rate cuts have decreased since the year's start, aiding the GBP in withstanding the early 2024 USD surge.