The US dollar returned its recent wins when FOMC member Brainard expressed a stronger degree of caution in her testimony. She cited that there’s a need to exercise prudence before hiking and that she’d rather wait for stronger evidence of a rebound in consumer spending and inflation before voting to tighten. She also mentioned vulnerabilities to external risks from China and emerging economies, as well as Japan and Europe. There are no major reports due from the US economy today.
The euro was mostly weaker in the latter trading sessions even though medium-tier data came in line with expectations. Today has the Italian industrial production and German final CPI readings due, although these might not have such a strong impact on the shared currency. Later on, ECB Governor Draghi has a speech lined up ahead of the release of the ZEW economic sentiment figures.
The pound regained a bit of ground against its rivals as the UK CB leading index improved from -0.3% to 0.0%. Traders are also likely positioning for the UK CPI release today since the headline figure is slated to rise from 0.6% to 0.7% while the core figure could climb from 1.3% to 1.4%.
The franc was able to take advantage of dollar and euro weakness even as there were no releases from the Swiss economy. Today has the Swiss PPI due and a 0.2% drop in producer prices is eyed, although franc action might take its cue from top-tier euro zone data.
The yen regained ground against its peers after Japan’s BSI manufacturing index showed an impressive rise from -11.1 to +2.9 to show a return to industry growth. To top it off, dollar weakness drew traders back to the yen as a safe-haven alternative. There are no other reports due from Japan today but risk appetite could influence yen movements.
Commodity Currencies (AUD, NZD, CAD)
The comdolls took advantage of dollar weakness and were able to hold on to their gains after Chinese data came in slightly better than expected. Industrial production is up from 6.0% to 6.3% while retail sales improved to 10.6% instead of holding steady at 10.2%. New Zealand’s current account balance is due next.