Daily Currency Update
The USD was all over the place after the keenly anticipated US inflation report this morning. Data showed that the annual Consumer Price Index (CPI) declined to 6.4% in January. This reading came in higher than the market expectation of 6.2%. Despite the higher-than-expected numbers, the greenback failed to capitalize on this small victory. This might be yet another cue for further rate hikes by the Federal Reserve. USD index fell 0.3% to the 102.89 mark ahead of January's consumer price report. Markets are forecasting that the Fed is likely to raise key rates by a total of 50 basis points (bps), the upper bound of the target corridor would then be 5.25%.
Key Movers
EUR/USD has retraced a small portion of the initial post-CPI spike to 1.0800 but has managed to hold above 1.0750. Meanwhile, in the UK, data showed in basic pay rates increased again in the last 3 months of 2022 even though the labor market cooled. The pace of pay growth in Britain is being monitored closely by the Bank of England as it gauges how much higher to raise interest rates. After a constant rollercoaster ride over the last several months, the GBP/USD has returned to 1.2200 following the wild reaction to the US CPI.
Expected Ranges
- EUR/USD: 1.069 - 1.0771 ▼
- GBP/USD: 1.209 - 1.2221 ▼
- AUD/USD: 0.6935 - 0.7007 ▼
- USD/CAD: 1.3309 - 1.3366 ▼