North American Summary and Highlights 18 Feb
Overview - USD drifted down and then up on Tuesday, as the market waits for the key Q4 GDP data at the end of the week.
North American session
NY trading had started with a small bounce after December housing starts came in better than expected (though DGO’s were marginally better than expected, the market did not really react given the volatility of the numbers). The USD gained more ground after the better than expected 0.7% industrial production figure for January. Even so, the market remains comfortable with pricing two 25bps cuts from the Fed in July and October, as CPI/core PCE inflation trends are expected to allow the Fed to ease later in the year. A more significant catalyst is required for persistent direction.
European morning session
The USD drifted lower against European currencies during European morning trading, though this was more technical trading rather than on any real news. The market is in a mood to wait for the Q4 GDP data on Friday, with the U.S. equity market consolidation helping to soothe concerns that AI losers could drag down the equity market and produce a USD risk off bounce. UK CPI came in line with expectations and did not really impact GBP.