Markets wait for the US data this afternoon.

• USD: Data heavy day for the US dollar today. Expect to see volatility during the data releases although positive figures expected.
• GBP: A quiet day expected for the pound with no data expected. We do have consumer inflation expectation tomorrow.
• EUR: Three ECB speakers across the day which could see further comments on when rate cuts could be expected.
• Market Sentiment: US dollar strength could be the story in the afternoon when we see data releases. Although deviation from the expected figures could change sentiment.

USD: The U.S. dollar experienced a slight dip yesterday, although its descent was cushioned by an uptick in U.S. Treasury yields. In any case, FX volatility remained subdued as traders appeared to refrain from taking large directional positions ahead of Thursday’s key events on the U.S. calendar: the release of the Producer Price Index and retail sales. Earlier in the week, the CPI report, failed to convince markets that the Federal Reserve could wait a little longer before removing policy restriction. Sentiment, however, could change if incoming data continues to come on the hot side, as this scenario could cause traders to reassess the central bank’s path.

GBP: The Pound held steady on Wednesday after the latest domestic GDP data was released. The figures reported that the UK returned to growth in the first month of 2024, which bolstered hopes that the UK’s recession in the second half of 2023 will prove to be short lived. The data came in at 0.2%, rising from December’s 0.1% contraction, and printed in line with forecasts. Although the latest figures confirmed a rise in UK GDP, closer analysis of the data showed that the headline figure wasn’t as strong as it initially appeared.

EUR: The Euro fluctuated on Wednesday, but traded mostly flat, following a negative industrial production print. In January, industrial production in the Eurozone dropped by an unexpected 3.2%, far below market expectations of a 1.5% contraction, and behind last month’s reading of 1.6%. The latest data came in at the lowest level in a one year period, and dampened the Eurozone’s economic outlook, ultimately keeping EUR exchange rates muted.

Economic Calendar