The is enjoying a firmer tone today against most of the G10 currencies. The consolidative/corrective tone continues. The European Central Bank and the Bank of England meeting outcomes are awaited. Neither central bank will do anything, giving the commentary extra sway. The bar to another ECB rate cut seems high, though headline inflation is below target. The Bank of England, on the other hand, is likely to cut rates at least once this year, but may not want the market to get too far ahead of it.
Equities and bonds are trading with a heavier bias. Tomorrow’s US jobs report has been postponed until next week but after the ECB and BOE meetings, attention will still turn to the US jobs market. , , and December reports are on tap. Mexico’s central bank meets later in the session. It is understood to have entered an extended pause that may extend through midyear.
Prices
G10
• The ’s high yesterday was set in early European turnover near $1.1840 (3.5 bln euro options at $1.1850 rolled off yesterday. It was sold to almost $1.1790 a little before midday in NY, and to $1.1780 today. Monday’s low, the lowest since January 23, was about $1.1775. There are options of for nearly 2.9 bln euros struck at $1.18 that expire today. The euro needs to take out the $1.1760-65 area to signal the next leg lower.
• The fear of material intervention to support the subsided. The dollar reached JPY156.85 yesterday as it extended its recovery off last week’s low near JPY152.10. Follow-through buying today lifted it to almost JPY157.35. Options for around $790 mln at JPY157 area expire tomorrow. Nearby resistance may be around JPY157.50.
• posted traded on both sides of Tuesday’s range yesterday but failed to settle below its low near $1.3650. Still, it broke down to nearly $1.3555 today, a nine-session low that frayed the 20-day moving average. The next support area may be in the $1.3535 area.
• The traded mostly sideways yesterday, but it looks vulnerable. The US dollar settled firmly near session highs yesterday, around CAD1.3680-5. We are looking for a move above CAD1.3700, which it tested in European turnover over, to signal gains toward CAD1.3755-60 area. There are about $650 mln in options struck at CAD1.3700 that expire tomorrow.
• The trading heavily yesterday but within Tuesday’s range (~$0.6945-$0.7050). It remains in that range today and reached $0.6960. The downside correction looks poised to extend. Monday’s low was around $0.6910. The next technical target is around $0.6880. A break of it could signal the next half-cent decline.
EM
• The softened yesterday, and the dollar returned toward the middle of this week’s range (~MXN17.1935-MXN17.5725). We suspect there is scope for the dollar to test the 20-day moving average (~MXN17.5315), which it has not traded above in nearly a month. The greenback is trading firmly today but has held below MXN17.39.
• The dollar reached a three-day high against the today around CNH6.9480 and is straddling the CNH6.94 area in European turnover. The PBOC set the dollar’s reference rate at CNY6.9570 (CNY6.9533 yesterday). The firmer dollar fixes continue to be smaller than when the PBOC lowers it.
• After gapping lower on Tuesday against the , the dollar continues to consolidate around levels since in mid-January. The record high set on January 29 was about INR92.0165. Today’s range has been roughly INR90.0735-INR90.5210. The central bank meets tomorrow and is expected to maintain the key repo rate at 5.25%.
Other Markets
• The 1.5% drop in the Nasdaq yesterday weighed on Asia Pacific equities today. Among the large bourses, only the Hang Seng, mainland shares that trade there, and Singapore’s Strait Times advanced. Europe’s Stoxx 600 is threatening to snap a four-day advance. US index futures are narrowly mixed.
• While US and European benchmark 10-year yields are firmer, the 10-year JGB yield eased almost two basis points. The longer-terms Japanese bond yields also eased after the auction was well received. European yields are mostly 1-2 bp higher. The 10-year Treasury yield is hovering around 4.28%.
• stalled near $5090 yesterday and fell to about $4790 today before stabilizing. It is around $4880 in late European morning turnover. Silver peaked a little above $92 yesterday and was setback to almost $73.50 today. It is near $79 in Europe.
• March is consolidating inside yesterday’s range. It is in a little more than a 50-cent range on either side of $64.
Data
• The partial shutdown of the US government has again disrupted the flow of economic reports. The JOLTS report and January are delayed. Today sees Challenger job cut report and weekly initial jobless claims. Weekly jobless claims are expected to creep up and at 212k (median forecast in Bloomberg’s survey) would be the highest since mid-December.
• Mexico’s central bank meets. It has signaled a pause in the easing cycle. The economy appears to have averted a recession and price pressures are elevated.
• The European Central Bank and the Bank of England are expected to standpat today. It is not a close call. The market expects the ECB to hold steady this year but recognizes a small chance of a cut. The BOE is expected to cut rates at least once this year, and the swaps market has it priced in for late Q2 or early Q3.
• Japan’s Minister of Finance weekly portfolio flow report showed Japanese investors bought foreign bonds for the second consecutive week for the first time since December. They also bought foreign stocks. Foreign investors bought Japanese bonds for the second straight week and buyers of Japanese stocks for the sixth consecutive week.
• Australia reported December trade figures earlier today. The surplus rose to A$3.37 bln from A$2.6 bln in November. The trade surplus averaged about A$3.8 bln a month in 2025 and A$5.6 bln in 2024. Exports rose by an average of 0.4% a month last year and fell 0.3% on average in 2024. Imports rose by an average of 0.5% a month in 2025 and averaged a 0.8% gain in 2024. Nevertheless, Australia recorded a current account deficit of around 2.3% of GDP last year, roughly the same as in 2024.
