Dollar demand mixed heading into weekend
Daily Currency Update
The US Dollar Index (DXY) showed slight gains at the start of Friday’s North American session. Conflicting opinions in the market about the future Federal rate movements drove mixed demand for the dollar. The stronger than expected CPI print yesterday showed that inflation surprised to the upside at 3.4% in December, and caused markets to think the central bank might delay rate cuts. This morning however, the Producer Price Index (PP) release showed that producer prices dropped 0.1% in the month rather than going up. This could mean lower inflation in January as those lower prices make their way into the consumer market. This paired with higher oil prices has the USD gaining against currencies like the euro but losing ground to commodity-based currencies like the CAD and AUD.Key Movers
Oil prices were up to end the week. WTI price reached back over $74 per barrel. This comes after bombing attacks by American and British forces on Houthi rebel facilities in Yemen as a response to attacks on shipping lanes in the Red Sea that have increased in severity in the last week.The euro continued it’s drop today, mostly caused by the movement of the USD on yesterday’s inflation release while GBP is up after GDP released for November showed a year-on-year increase of 0.2%, better than the previous month’s -0.1% drop.
The Canadian dollar is outperforming the USD heading into Friday as oil prices are up on increased tensions in the Red Sea and with no Canadian data today, the Loonie will follow general market trends.
Expected Ranges
- EUR/USD: 1.0853 - 1.0995 ▼
- GBP/USD: 1.2649 - 1.2781 ▲
- AUD/USD: 0.6652 - 0.6721 ▲
- USD/CAD: 1.3352 - 1.3455 ▼