Daily Currency Update

USD - US Dollar

The USD is slightly down in a mixed global currency market without a clear trend. European stocks are down following Asia's mixed results, with US equity futures slightly lower. Major bond markets have weakened slightly as US bond yields slightly increase. A $42 billion 10-year note sale today could impact prices. The USD's progress depends on strong economic data or higher yields, with other factors like position adjustments providing limited support. Despite limited US data today, several Fed officials' speeches could influence the market.

CAD - Canadian Dollar

The CAD remains stable in quiet overnight trading, unaffected by slight dips in stocks and supported by a minor increase in crude prices. Governor Macklem emphasized the slow progress towards 2% inflation, suggesting monetary policy requires more time to be effective. He also dismissed the notion that monetary policy could address Canada's high housing costs, attributing the issue to tight supply, which is beyond the scope of monetary policy. Observe USD/CAD trends.

EUR - Euro

The EUR appears slightly stronger in the short term, with steady gains from recent lows, despite disappointing data. German and Spanish industrial production showed a decline in December, with Germany's output falling by 1.6% month-on-month and Spain's by 0.2% year-on-year. Italian retail sales also dropped by 0.1% month-on-month in December. ECB's Schnabel emphasized the need for patience and caution, suggesting it's too soon to adjust policy, aligning with a hawkish stance.

GBP - British Pound

Sterling leads among major currencies today, with the pound surpassing 1.26, indicating resilience. The gains follow BoE's Breeden expressing confidence in the UK economy but awaiting further proof of declining inflation before endorsing rate cuts. Additionally, Halifax reported the strongest rise in UK house prices since mid-2022 in January, at 1.3%.