USDCAD seeks rebound as market calm persists

Key Movers

EURUSD experienced a modest recovery, surpassing $1.075, following its dip to a two-and-a-half-month low of $1.072 on February 5th. This rebound occurred as major central banks in Europe and the US were cautious about possible rate cuts.

GBPUSD remained stable at $1.26, maintaining its position after reaching a seven-week low of $1.2515 on February 5th. Investor expectations for early interest rate cuts in both the UK and the US were subdued, influenced by cautious statements from officials in both nations. Bank of England Deputy Governor Sarah Breeden suggested a shift in focus towards evaluating the duration of interest rates at their current level rather than immediate considerations of further increases. This signals a deliberate approach by the central bank, indicating that rate cuts are not being hastily implemented.

AUDUSD experienced a significant decline, dropping below the psychological support level of 0.6500 during the early New York session. The Australian dollar faces a pronounced sell-off, with investor anxiety heightened due to the lack of potential economic triggers. The RBA recognized that inflation in the fourth quarter decreased more than anticipated. However, there is uncertainty about when inflation will rebound to the targeted 2-3%. The country's consumer price index, which increased by 4.1% year-on-year in the fourth quarter, showed a slower pace compared to the 5.4% recorded in the third quarter and fell below the forecasted 4.3%.