Daily Currency Update

USD - US Dollar

Federal Reserve officials have reiterated the cautious tone of the recent FOMC minutes, especially regarding inflation risks and the dangers of reducing interest rates too quickly, in light of the unexpected rise in CPI. Despite this caution tech stocks have led gains in equity markets and the S&P 500 has seen a 6% increase so far this year. We don't anticipate major changes in U.S. economic data soon, though we're optimistic about Treasury yields improving with February's data. However, the upcoming PCE report on February 29 is expected to be strong, likely delaying any rate cuts. Today's focus is on the Conference Board's Consumer Confidence index for February, which is expected to remain steady. We foresee a chance for the DXY to stabilize or rebound as risk sentiment wanes.

CAD - Canadian Dollar

The CAD's dip against the USD has been negligible compared to other G10 currencies, largely due to its correlation with US data sentiment. The market closely links Bank of Canada and Fed policies which has helped shield the CAD compared to other G10 currencies. Over the medium term, a USD decline and CAD's rate appeal could bring the pair back to 1.30 in the latter half of the year, though the market might be underestimating the possibility of Bank of Canada easing. Observe USD/CAD trends.