The US dollar regained a lot of ground after the final Q4 GDP reading was upgraded from 2.0% to 2.1% on stronger consumer spending and a couple more FOMC members supported the likelihood of seeing three rate hikes this year, allowing the Nasdaq to hit a record high as well. Dollar pairs had a volatile moment when news reports indicated that Trump still plans to penalize currency manipulators. The core PCE price index, as well as personal spending and income data, are lined up today. FOMC member Kashkari, who dissented against a rate hike this month, has a speech lined up.
The euro sank against its peers when preliminary CPI readings from Spain and Germany fell short of estimates. The former showed a 2.3% gain versus the projected 2.6% increase while the latter posted a 0.2% uptick versus the estimated 0.4% growth. Euro zone flash CPI estimates are due today so weak readings could undermine the ECB’s shift to a less dovish stance. German retail sales, unemployment change, French preliminary CPI and consumer spending are lined up as well.
The pound regained ground against its peers on the lack of negative headlines pertaining to Brexit negotiations. UK net lending to individuals came in line with expectations but BBA mortgage approvals came up short. UK current account balance, which is slated to show a smaller deficit of 16.3 billion GBP, and revised Q4 GDP are lined up today but reports related to Brexit could be a bigger driver of price action.
The franc gave up ground against most of its peers but advanced against the euro. The KOF economic barometer improved from a downgraded 106.9 figure to 107.6 instead of dipping to 105.9. There are no reports due from the Swiss economy today so the franc could take its cue from market sentiment or euro zone reports.
The yen gave up some ground against its counterparts as dollar strength returned and US bond yields recovered. Risk appetite also picked up, leading traders to let go of their safe-haven yen holdings. Data from Japan came in mixed, with household spending down 3.8% versus the projected 1.6% drop and the Tokyo core CPI printed a 0.4% drop in price levels. The jobless rate improved from 3.0% to 2.8% while preliminary industrial production posted a stronger than expected 2.0% gain.
Commodity Currencies (AUD, NZD, CAD)
The comdolls took advantage of the pickup in risk appetite and advanced against the euro but these currencies were still weaker to the dollar. Chinese official manufacturing PMI improved from 51.6 to 51.8 while the non-manufacturing reading is up from 54.2 to 55.1 to reflect stronger industry expansion. Canadian monthly GDP is due and a 0.3% monthly growth figure is eyed.