North American Summary and Highlights 13 February

North American session

US PPI was on the firm side of consensus at 0.4%, though core rates at 0.3% were on consensus. Despite this, and a fall in initial claims to 213k from 220k, UST yields slipped, with economists noting that the PPI components that contribute to core PCE price data were quite subdued. The USD saw little initial reaction to the data, but later slipped ahead of a scheduled Trump tariff announcement.  

On Trump’s announcement the USD saw a bounce, with EUR/USD briefly fully erasing its gains, perhaps due to Trump stating European VAT rates were seen as a tariff. However, the move was quickly reversed with the tariffs not set for immediate introduction and USD losses extended in late trade. EUR/USD advanced above 1.0450 from 1.0375 while GBP/USD moved above 1.2550.  USD/JPY fell below 153 from 153.80. AUD/USD moved above .63 while USD/CAD slipped to near 1.42. Equities were stronger. 

European morning session 

The EUR and most of the other risky currencies edged lower against the USD through the European morning, with the exception being GBP, which held its own. EUR/USD fell around 15 pips to 1.0415, AUD/USD fell 20 pips to 0.6270 and USD/CAD rose 30 pips to 1.4290.  

GBP/USD was net unchanged just below 1.25 with GBP benefiting from stronger than expected UK Q4 GDP data, which showed a 0.1% q/q gain against market expectations of a 0.1% decline. The GBP gains were modest partly because the data was less good than the headline suggested. GDP per capita fell 0.1%, most of the gain was in inventories, business investment fell sharply and household consumption was flat.  

The CHF and the JPY were the best performers through the morning, with USD/CHF down 40 pips to 0.9070 and USD/JPY losing around 20 pips to 153.80, correcting some of Wednesday’s rise. Swiss January CPI was in line with expectations at -0.1% m/m, 0.4% y/y.