Daily Currency Update

USD - US Dollar

The USD is on track for a weak close this week, with upcoming job data potentially influencing its direction. Market volatility spiked following a hawkish FOMC meeting, affecting US yields and regional bank stability concerns. Despite this, US equities recovered, buoyed by strong tech earnings. While major currencies maintained their January trading ranges, signs suggest the USD's rebound may be ending, with technical indicators pointing to potential losses. Today’s US Non-Farm Payrolls are projected to increase by 185k, with a slight rise in unemployment to 3.8% and stable average hourly earnings growth at 4.1% year-on-year.

CAD - Canadian Dollar

The CAD is benefiting from a weaker USD, narrowing spreads, and fluctuating risk appetite, regaining some of its mid-month losses against the USD. BoC Governor Macklem's recent comments to Canadian lawmakers highlighted a gradual and inconsistent inflation progress, suggesting interest rates will remain steady at least until mid-year. Despite the spot rate slightly exceeding fair value estimates today (1.3455), favorable conditions for the CAD may support further gains. Observe USD/CAD trends.

EUR - Euro

The EUR remained stable today, with initial modest gains halting just under 1.09 after an unexpected rise in French Industrial production in December (1.1% compared to the expected 0.2%). However, the late-year performance of the Eurozone economy is largely accounted for, and this data had minimal impact. The primary factors providing short-term support for the EUR are declining US yields and tighter spreads.

GBP - British Pound

The pound is stable, maintaining the 1.26/1.2825 range established since late December. BoE communications have convinced traders that a UK rate cut before June is unlikely, in contrast to expectations of earlier cuts in the US or Eurozone. This outlook is likely to bolster the GBP, with a bias towards modest further gains.