Daily Currency Update

USD - US Dollar

Currencies mixed movements in subdued trading ahead of US data releases today. Key focus is on US PCE data, expected to be impactful after recent high CPI and PPI figures hinted at potential rise in core PCE for January. Despite an anticipated increase, core PCE year-over-year is expected to slightly decrease to 2.8%. This data is crucial for the Fed, though a single month's rise may not cause major concern. Markets might have partly priced in the expected core PCE rise. Lower than expected gains could negatively affect the USD. Other data points include weekly claims, Chicago PMI, and Pending Home Sales.

CAD - Canadian Dollar

The CAD slightly underperformed today in quiet, month-end trading. TSX stocks fell behind US markets in February, and increasing US/Canada spreads have negatively impacted CAD's outlook. Canada's December and Q4 GDP data, expected to show a 0.2% monthly increase and 1.6% annual growth, will be released. If GDP growth is positive for the quarter, Canada will avoid recession after a -1.1% in Q3, potentially delaying Bank of Canada's rate cuts amid inflation concerns, possibly supporting the CAD.  Observe USD/CAD trends.

EUR - Euro

The EUR rebounded from the 1.08 level, gaining further in European trading on the back of strong CPI data from Spain, France, and German regions. With German CPI anticipated to increase by 0.5% M/M, there's a slight chance of exceeding expectations. This could support ECB policymakers who prefer delaying rate cuts until at least June.

GBP - British Pound

January's UK lending figures slightly exceeded expectations, with Net Consumer Credit increasing by GBP 1.9 billion and Mortgage Approvals reaching 55.2k, compared to the anticipated 52k. Nonetheless, this data had minimal impact on the pound, which remains stable in the mid-1.26 range.