Daily Currency Update

USD - US Dollar

The USD is slightly softer today, with most major currencies gaining against it. GBP leads G10 with a 0.5% rise. JPY fell sharply (1.5%) after the BOJ decision, slightly boosting the DXY. The BoJ kept rates steady, signaling no imminent policy change. Global stocks are up, bonds strong, and oil prices mixed; overall positive risk sentiment may pressure the USD. DXY is consolidating amid Fed efforts to temper rate cut speculations, despite Powell’s recent remarks. Fed officials Barkin, Bostic, and Goolsbee are scheduled to speak today, potentially influencing market sentiment.

CAD - Canadian Dollar

The CAD remains steady, hovering just below its recent high against the USD, slightly above 1.34. November's Canadian CPI is anticipated to decrease by 0.1%, with the annual rate expected to lower to 2.9% from October's 3.1%. Although headline inflation is approaching the BoC's target range, Governor Macklem indicated last week that the central bank isn't declaring triumph over inflation yet. Inflation needs to near 2% and core inflation must decline more. Any indication of persistent prices in today's data could provide a modest boost to the CAD. Observe USD/CAD trends.

EUR - Euro

The final Eurozone CPI for November showed a 0.6% monthly decrease, resulting in an annual increase of 2.4%. This is a slowdown from the 2.9% yearly rise in October. While underlying price trends eased in November, they, along with services inflation, are still high. ECB officials have discussed the future of interest rates; Villeroy suggested that rate reductions could occur in 2024, after maintaining them at levels high enough to impact inflation.

GBP - British Pound

Yesterday, the GBP weakened without a clear cause, but it's regaining some ground today. BoE Deputy Governor Broadbent cautioned that persistent wage growth might require the BoE to maintain higher interest rates for an extended period to curb domestic inflation, highlighting a divergence in policy direction from the Fed. MPC member Breeden is scheduled to speak at 8ET.