The US dollar give up early gains following the release of the PCE deflator index. The dollar has been supported this week by month-end flows and as markets work to price in central bank announcements. The world remains on edge as Russia continues to amass troops, tanks and equipment at the Ukrainian border. Talks between both sides continue. Equities remain volatile as markets work to price in a more hawkish Fed, geopolitical uncertainty and continue to digest earnings.
“What we cannot bear removes us from life; what remains can be borne.”
January 28, 2022
EUR/USD 1.1146 GBP/USD 1.3417 USD/CAD 1.2768 AUD/USD 0.6988 USD/JPY 115.43 USD/CNH 6.364 USD/ILS 3.1969 USD/MXN 20.7774 USD/CHF 0.9317 USD/INR 75.0412 USD/BRL 5.3870 USD/SGD 1.3555 USD/DKK 6.6778 USD/SEK 9.4565 USD/NOK 8.9709
The dollar, after rising to the highest levels since July 2020, gave back some ground following inflation data for December which showed Core PCE rising +4.9% YOY– a touch more than expected (+4.8%). Univ. of Michigan consumer sentiment is due out later this morning.
Following Wednesday’s Fed comments, markets have priced in a rate hike for March. The bet now is by how many basis points (bp) will the Federal Reserve raise rates? Investors price in a 1 in 5 chance of a 50bp hike.GBP
The pound is largely unchanged sitting slightly higher than yesterday’s low. Next week, the Bank of England will meet with markets anticipating another rate increase.EUR
Initially lower versus the dollar – touching June 2020 levels, the euro gained as the dollar lost ground following inflation data.CAD
USD/CAD rose, and then gave back morning gains. Uncertainty in Russia is a key driver of rallying oil prices. The Brent index hit the highest level since 2014. Higher oil prices tend to lead to a stronger loonie.ASIA/PACIFIC
USD/JPY retreats from multi-year high on profit taking and as the dollar slides following the release of the PCE index.
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