The USD is flat, oil prices are strengthening, equity markets are mixed, and US yields are rising as risk sentiment steadies. The U.S. dollar is holding steady against major currencies as markets remain cautious ahead of Wednesday’s Federal Reserve minutes, with traders awaiting fresh insight into policymakers’ views on inflation and future interest-rate policy. Any shift in tone on the pace or timing of rate cuts in the minutes could trigger renewed movement in the dollar. Global equities were mixed, with US futures and some Asian markets under pressure as concerns around AI spending weighed on sentiment, while European stocks advanced modestly. Trading in Asia was relatively subdued during the Lunar New Year holidays, with several major regional markets closed, resulting in thinner liquidity across the region. Elsewhere, oil prices rallied amid ongoing geopolitical tensions and supply uncertainty, while gold weakened as haven demand eased and Treasury yields edged higher. Bitcoin stalled below $68,000, struggling to gain momentum as broader risk sentiment remained mixed. In focus today, the CAD Inflation report, US ADP Employment Change, and several Fed speakers will help guide currency markets.
In the news. US & Iran nuclear talks underway in Geneva as Trump says he will be 'indirectly' involved. Macron arrives in India as blockbuster fighter jet nears. Rubio says Orban's leadership is 'essential' to US interests. Iran launches naval drills amid rising tensions with the US. Brussels to tie EV subsidies to 70% local content rule. Russia pummels Ukraine's power grid before talks. Global stocks steady as US-Iran talks, & AI keep the market on edge. Trump says Rubio is in talks with Cuba as it faces an economic crisis. PM Carney taps former head of public services to spearhead CUSMA negotiations. Ontario finally sees increases in housing starts after years of decline.
In currency markets. The Japanese yen strengthened against the U.S. dollar amid renewed demand for haven assets and speculation around potential policy support. In contrast, the South African rand and Swedish krona weakened versus the greenback, reflecting broader pressure on higher-beta and European currencies. CNY is flat, while Asian currencies slip by an average of 0.1% against the USD. Trading currencies are mixed, with ZAR & SEK weakening 0.45%, DKK, AUD, SEK, MXN, and PLN slipping 0.1%, CHF & KWD flat, and NZD advancing 0.25% against the USD.
In commodity markets. Oil prices strengthens 1.7%. Natural Gas & Coffee prices weakened 3.3%. Gold prices fell 2%. Silver prices tumbled 4.7%. Copper prices dropped 1.8%. Soybean prices down 0.1%, and Wheat prices retreated 1.2%.
CAD is holding steady against the U.S. dollar, giving back some of last week's gains amid quiet markets and softening commodity prices. USD/CAD remains near the mid-1.36 range as traders turn their attention to today’s Canadian inflation report for fresh direction. Headline CPI is expected to hold at 2.4% year-on-year, a result that would likely support expectations for the Bank of Canada to keep interest rates on hold at its March meeting.
EURCAD is trading broadly flat, as weakness in the euro following disappointing German and Eurozone ZEW sentiment data is offset by a steady Canadian dollar ahead of today’s CPI release. With both currencies facing domestic data-driven themes and limited fresh directional catalysts, the cross remains range-bound near recent levels.
EURUSD remains under pressure, holding below 1.1850, weighed down by disappointing German and Eurozone ZEW sentiment data and a broadly firmer U.S. dollar. German Economic Sentiment unexpectedly fell to 58.3 in February, missing forecasts for an improvement, while Eurozone sentiment also deteriorated, undermining the common currency. With U.S. futures pointing lower and safe-haven demand supporting the greenback ahead of key U.S. data and Fed minutes, the pair continues to trade with a bearish bias.
GBPEUR slipped in early trading as the pound came under pressure following weaker-than-expected UK labour market data, which lifted expectations of a Bank of England rate cut in March. UK unemployment rose to 5.2% and wage growth slowed, reinforcing bets on policy easing and pushing the pair lower towards 1.1450. While the euro remains supported against sterling, lingering expectations of potential ECB rate cuts could limit further upside in the cross.
GBP remains under pressure near the 1.3550 handle after weaker-than-expected UK labour market data reinforced expectations of a Bank of England rate cut next month. The unemployment rate rose to 5.2% — the highest in five years — while wage growth cooled to 4.2%, adding to signs of softening economic momentum. Although the U.S. dollar lacks strong bullish conviction amid Fed rate-cut bets, the pound continues to trade with a bearish bias ahead of upcoming UK inflation data and the FOMC minutes.
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