Daily Market Update

Buck quiet, Japan sees price growth

February 27, 2024

The U.S. Dollar is moving in tight ranges once again as markets digest data domestically and pay attention to the potential for a monetary pivot in Japan.


During the Asian trading session, Japanese 2-year yields climbed to their highest since 2011 following higher-than-expected inflation figures. This in turn is increasing the chances of a pivot by the Bank of Japan and given the Yen a slight uptick over the Buck.

Domestically, we got the reading for January’s Durable Goods Orders revealing a contraction instead of the expansion expected. When excluding transportation however, it seems like December figures were revised upward, almost negating the (-0.3%) decline for the start of the year. At 10AM, we will get the release of Consumer Confidence. Tomorrow, we will have the second revision of Q4 Gross Domestic Product as well as Personal Consumption numbers. Perhaps more action and FX volatility then.


What to Watch Today…

  • PCE Deflator, Thursday
  • Euro-zone CPI, Friday
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The Euro is not a big mover right now but has managed to hold on to at the current level despite some dovishness from financial figures. During a speech to the European Union Parliament on Monday, European Central Bank President Christine Lagarde explained that wage growth may not be telling the whole story and that there is some struggle to be had down the road. Regardless, chances of the ECB cutting interest rates have not gone up, but there is doubt about a stronger recovery for the economic rhythm of the Euro-zone. We are on the camp of optimism and data tomorrow and Friday will aid in establishing if we have it right or there is more time until good figures paint a better picture.


The Japanese Yen is looking to eek out a gain of half percent this morning over the Buck after excitement following inflationary releases showing advancement. January Consumer Price Index came in at 2.2% when 1.9% was estimated. With the year-on-year average excluding volatile energy and food prices standing at 3.5%, traders are hoping the Bank of Japan sees it as a sign that they can bring their interest rate back up to 0.0%. Anything indicating the BOJ will get away from negative interest rates will continue to put downward pressure on the dollar.


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