The is mixed against the G10 currencies. A healthy reception to Japan’s 5-year bond auction helped extend the rally in JGBs, and despite the lower yields, the ’s roughly 0.25% advance puts it atop the G10 performer today. Ahead of what is expected to be a hawkish hold by the Reserve Bank of New Zealand tomorrow, the is up about 0.2%. Disappointing UK labor data and the soft expectations component of Germany’s survey is weighing on and the .
While the US and Iranian official meet in Switzerland today, Iran has closed part of the Strait of Hormuz for their military drills, and the US amassed a large military force in the area. Tensions are running high, and although oil prices are higher, gold was sold to a seven-day low.
Prices
G10
• The euro traded quietly yesterday. It continues to coil largely in the range set last Monday between $1.1810 and a little more than $1.1925. Yesterday, it recorded its fourth consecutive session of lower highs and drifted lower in late dealings. The 20-day moving average, which the euro has not settled below since January 21, is near $1.1845 today, and today’s low is about $1.1830, recorded after the disappointing German ZEW survey. The selling pressure does not appear exhausted.
• The dollar appears to have forged a base above JPY152, and disappointing Japanese data has seen the swaps market to downgrade the chances of an April hike from about 90% to 66%. Initial resistance, around JPY153.75 was tested, but it was rejected and the greenback was sold to about JPY152.70 by early European turnover. The JPY153.10-20 area now offers resistance.
• Sterling has gone nowhere quickly. Last Tuesday, its five-day moving average was slightly below $1.3645. It is now around $1.3625. For the past three sessions, it has traded between about $1.3590 and $1.3670. It drifted lower in late dealings yesterday and was sold to nearly $1.3550 a seven-day low on the back of the disappointing employment data today. It recovered to slightly above $1.3600 in the European morning but needs to re-establish a foothold above $1.3630 to take the downside pressure off.
• The looks vulnerable. Yesterday, the greenback posted its highest close since February 6, above CAD1.3635. It has edged up to nearly CAD1.33655 today and pushed above the 20-day moving average is slightly (~CAD1.364), which the US dollar has not settled above it since January 21. Options may protect the downside Over the next three days, there are more than $3 bln in options struck at CAD1.36 that expire. The month’s high was near CAD1.3725. A push above it would target the CAD1.3760 area next.
• After reaching almost $0.7150 last week, the has pulled back. It reached $0.7045 before the weekend and consolidated yesterday before retesting it today. Options at $0.7025 for ~A$430 mln expire today. The consolidative/corrective phase does not seem to be over. Hawkish minutes from the central bank seemed to have little impact.
EM
• Despite concerns that Mexico’s commitment to what it calls humanitarian aid to Cuba risk earning the US ire, the remains near its best level since June 2024. The US dollar is stuck in its trough. Its low this month was near MXN17.13. It did not rise above MXN17.28 last week. Today’s range has been about MXN17.1620-MXN17.2220.
• Without Beijing’s guidance, the market took the to its best level since April 2023. The dollar was driven to almost CNH6.8810. It finished last week slightly above CNH6.9010. Yesterday’s low is holding today, and the broadly firmer US dollar has risen to almost CNH6.89. Chart resistance is seen around CNH6.91.
• The continues to consolidate in narrow ranges, within the range set on February 6. The dollar carved a range that session between about INR90.1750 and INR90.8550. Today, the greenback carved out an INR90.6600-INR90.7850 range.
Other Markets
• Equities are trading heavier today. Many Asian markets are closed to the New Year festival. Tokyo traded low though Australia and India edged up. The Stoxx 600 in Europe is nursing a small loss. US index futures are being led lower by ’s 0.75% decline. The are about 0.4% lower.
• Benchmark 10-year yields are lower. A well-received five-year bond auction in Japan helped trigger a dramatic rally that saw the 10-year yield fall nearly eight basis points. The 30- and 40-year yields fell nearly nine basis points. European yields are mostly 1-2 bp lower, though the soft UK labor data has seen the UK 10-year Gilt yield ease by almost four basis points. The 10-year Treasury yield is off a couple of basis points to slightly below 4.02%.
• Gold lurched lower today. It was sold to $4860, a seven-day low. It stabilized and is near $4930 in late European morning turnover. Silver, too, was taken to a seven-day low (~$72.80). It is trading around $74.50 in Europe.
• Talks between the US and Iran continue today and many still think a US/Israeli strike is likely. March WTI recovered from a low near $62 yesterday and briefly traded above $64 today. It is still hovering near there ahead of the US open.
Data
• The busy US economic calendar begins slowly after yesterday’s holiday. Today’s feature is the February survey. It is expected to have softened a little after it rebounded from -3.7 at the end of 2025 to 7.7 in January. Recall that the Q4 25 average of 5.9 was the highest quarterly average Q4 21. Federal Reserve Governor Barr and San Franscico Fed President Daly speak today about the economic impact of AI.
• Canada reports December portfolio flows and January CPI. Foreign demand for Canadian bonds and stocks fell by about a third (or around C$59.7 bln) in the first 11 months of 2025 compared with the Jan-Nov 2024 period to about C$120.8 bln. Canada’s merchandise trade deficit grew in the same period from almost C$9 bln to C$30.6 bln. Meanwhile, Canada’s CPI looks steady at 2.4%. The average of the underling core measures may have slipped slightly to 2.55% from 2.6%, according to the median forecast in Bloomberg’s survey.
• Germany’s ZEW survey disappointed. The expectations component fell to 58.3 from 59.6. It followed two strong gains, but economists looked for more. The current assessment improved for the second consecutive month but at -65.9, the gap remains significant. Still, it is the best assessment of current conditions since July 2023.
• The UK employment data showed a softer wage growth in December, a key for some members of the Bank of England’s monetary policy. The BOE’s preferred measure (regular private sector wage growth) slowed to a five-year low of 3.4%. The three-month employment change accelerated in December, and the ILO measure of ticked up to 5.2%, the highest since early 2021. Still, the number of payrolled employees fell 11k in January for the fifth month in a row. Jobless claims rose by almost 29k after December’s nearly 18k increase was revised to slightly less than 3k.
• Minutes from this month’s Reserve Bank of Australia meeting in which a rate hike was delivered were released earlier today. Governor Bullock has indicated that the central bank is prepared to hike rates again if necessary. The futures market conviction of another hike in May slipped to almost 70% from almost 95% at its peak last week. The Reserve Bank of New Zealand meets tomorrow, and the new governor Anna Breman is unlikely to increase rates, but an expansion seems to be taking hold, and the swaps market anticipates a hike in Q4 26.
• Japan’s tertiary industry (services) index fell by 0.5% in December and adding insult to injury the November print was revised to -0.4% from -0.2%. It was the third contraction in four months. However, after the subdued Q4 25 GDP (0.1% quarter-over-quarter), the somber news was already taken on board.
