NZD pushes off lows as USD give up post CPI gains

Key Movers

The USD retreated through trade on Wednesday, down against all majors except the Great British Pound. Treasuries, rates and the dollar relinquished most of the gains won in the aftermath of Tuesday’s robust CPI report, following comments from Fed officials Goolsbee and Powell. Chicago Fed President, Austin Goolsbee affirmed the Fed’s commitment to controlling inflation but highlighted that the Fed’s main measure of price pressures was the PCE index, not CPI and that one month is not enough to move the Fed off its current path. With Goods and Services inflation trending lower, Powell acknowledged they had expected an elevated CPI read in January and will be looking to upcoming PCE data for context and guidance. With markets giving back gains, our attentions turn now Q4 GDP data out of Japan and the UK with US retail sales and commentary from ECB President, Christine Lagarde dominating the docket. We are also closely monitoring the Bank of Japan and the Japanese Ministry of Finance. Officials indicated Wednesday they stand ready to intervene should the yen continue to depreciate. While the market is accustomed to verbal intervention, a move to correct direction could create significant short-term volatility.