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USD steady on the back of falling inflation

Friday 27 January, 2023

Daily Currency Update

The USD is holding steady at just under 102 on the index, while the Personal Consumption Expenditure (PCE) index release this morning showed further reductions in price inflation. The headline number came in 5% up year over year compared with 5.5% last month. Stripping out some of the more volatile costs, the core index was up 4.4% for the same period, down from the 4.7% we saw released in December. Futures markets right now are pointing towards a lower open after tougher trading sessions overnight.

Key Movers

The Euro lost some ground against the greenback in the overnight session after consumer confidence in France fell more than expected and ECB Chief LaGarde gave a speech reminding markets that further rate hikes are ahead. The GBP/USD pair is narrowing into a tight channel, ahead of a week full of central bank announcements which could provide some volatile moves. The willingness of the BoE to be hawkish on rates with inflation still running close to 10% will be key for the Pound. The Canadian Dollar is holding onto gains it made yesterday as oil spikes and pressure comes off the US Fed to raise hikes aggressively next week. The WTI oil price has returned to over $82 a barrel this morning, while the TSX is looking to close a 4th straight positive week in January. With no Canadian data today, the markets will be following general market sentiment.

Expected Ranges

  • EUR/USD: 1.0850 – 0.0902 ▼
  • GBP/USD: 1.2346 – 1.2418 ▼
  • AUD/USD: 0.7082 – 0.7192 ▲
  • USD/CAD: 1.3313 – 1.3367 ▼

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