Wednesday February 12th, 2025

The USD remained steady, oil prices declined, equity markets rose, and US yields increased ahead of the US inflation report and the final day of Fed Chair Powell’s testimony on Capitol Hill. The USD maintained stability following Powell’s testimony, during which he emphasized that there was no urgency to cut interest rates. Investors redirected their focus to the US inflation report, with inflation levels anticipated to remain at 2.9% y/y in January. Global equities edged higher as investors assessed the latest earnings news, focusing on the US inflation report for clues about the outlook of US interest rates. Money markets continue to fully price in just 25 bps rate cut by the Fed in 2025 by September. Elsewhere, oil prices fall on rising US crude stocks, Bitcoin firms to $96k, while Gold & Silver prices weaken. In focus today, the US CPI report, Fed’s Chair Powell testifies, BoE’s Green Speech and the US Monthly Budget Statement will help provide direction to currency markets today.

News Headlines.?India’s inflation cools to a lower-than-expected 4.31% in January. Fintech unicorn Zepz to lay off 20% of its global workforce. China's tech stocks enter bull market after DeepSeek breakthrough. The EU weighs temporary gas price cap to counter diverging costs with US. Russian defence spending exceeds all Europe combined, study finds. Germany's struggle to house refugees fuels election debate. Italy's woes deepen as industry output plunges in December. Trump's justice department hits the brakes on anti-corruption enforcement. The White House says 25% tariffs on steel and aluminum would stack on other 25% tariffs.

In currency markets.?Currency markets are mostly steady ahead of the US inflation report, while the JPY weakens on the prospect of paused US rate cuts, and the INR struggles on the prospect of further rate cuts. CNY &?Asian currencies are flat on average against the USD. Trading currencies are mixed, with JPY &?NOK weakening 0.5%, AUD?&?NZD fell 0.25%, SEK?down 0.15%, MXN?flat, CHF?&?ZAR strengthened 0.3% against USD.

In commodity markets.?Oil prices tumbled by 1.3%. Natural Gas & Gold prices weakened by 0.9%. Silver prices fell 0.6%. Copper prices flat, while Wheat prices strengthened by 0.8%, and Soybean prices dropped by 0.4%.

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Current level USD Index??????????????? 107.94??????????? Flat

CAD?continues to trade within a narrow range despite declining commodity prices and ongoing threats of U.S. tariffs. Currently, the U.S. is considering two proposals: a global tariff of 25 percent on steel and aluminum, effective March 12, and has also paused discussions, until March 4, regarding an economy-wide 25 percent tariff on Canada and Mexico while negotiating border-security agreements with both countries. In intraday trading, the U.S. inflation report will help determine the direction of the loonie.

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Current level USDCAD?????????????????? 1.4300??????????? Up 0.1%

EURCAD continues to gain in early trading as commodity prices soften, and the persistent threat of US tariffs keeps the loonie at a disadvantage.

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Current level EURCAD?????????????????? 1.4833??????????? Up 0.2%

EUR edged through 1.0350 ahead of the US inflation report. The euro edged higher despite the growing threat of a US/EU trade war, with the US planning reciprocal tariffs. Investors are on the sidelines, focusing on Fed Chair Powell's testimony and the US?inflation report to provide direction to the single currency. For the January US CPI date, markets expect core CPI to rise 0.3% m/m. A print above the market consensus could negatively risk sentiment and boost the USD.

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Current level EURUSD?????????????????? 1.0375??????????? Up 0.1%

GBPEUR?stalls, straddling 1.2000 despite growing concerns over UK?demand outlook.

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Current level GBPEUR?????? 1.2004 (0.8330)???????? Down 0.1%

GBP remains above 1.2450 ahead of the US?CPI and Fed Chair’s testimony. The pound has strengthened from weekly lows despite concerns about the economy, which is anticipated to have contracted by 0.1% in Q4/24. On Tuesday, MPC?member Mann expressed her concerns regarding the UK?demand outlook and emphasized the need to adjust financial conditions. Attention will be on the UK?GDP report released on Thursday, as it will be a key driver for the pound. Intraday, the US?inflation report and accompanying comments from the Fed Chair's testimony will provide guidance for the pound today.

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Current level GBPUSD?????????????????? 1.2451??????????? Flat