North American Summary and Highlights 11 February

North American session

While he stated there was no hurry to cut rates Fed Chairman Powell’s testimony to the US Senate brought few surprises, and the USD mostly slipped during the testimony, which was extended with a late move. EUR/USD advanced to 1.0365 from 1.0320 while GBP/USD rose to 1.2445 from 1.2370. USD/CAD saw a late move below 1.43 while AUD/USD tested 0.63. USD/JPY in contrast held firm, advancing above 152.50.  

Before Powell spoke Fed’s Hammack sounded quite hawkish, calling for rates to be held for some time, but got little response from a market that was waiting for Powell.  Fed's Williams was more balanced late in the session. 

European morning session 

A quiet European morning saw EUR/USD edge up 10 pips to 1.0315, while USD/JPY rose around 20 pips to 152.15. USD/CAD was also slightly firmer, but otherwise there was very little net FX movement against the USD.

Early on Norwegian Q4 mainland GDP data came in much weaker than expected at -0.4% q/q, but there was minimal FX market reaction with EUR/NOK just up around one figure to 11.57 on the session. 

UK MPC member Catherine Mann spoke mid-morning about her decision to vote for a 50bp rate cut at the last meeting, which had been a surprise as she is an established hawk. She justified the vote by saying that she is an activist by nature and was anticipating weakness in the labour market due to weak demand. GBP was a touch weaker against the EUR through the session but GBP/USD was little changed.  

Late in the morning the US January NFIB small business optimism index was weaker than expected, showing a modest decline from the surge higher seen in the last couple of months, but remains well above pre-election levels.