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EU inflation numbers likely to be highlight today

Good morning

US dollar remains under a bit of pressure against other majors as Fed officials seem to push back on the idea of a 50bps rate rise, Bullard Harker and Dudley all speaking against such a move for now. GBPUSD up to 1.3540 and EURUSD to 1.1285. The prospect of higher rates in the US seems to be offset by a mildly hawkish BoE and market thinking that even the ECB could turn a little more hawkish. Stock markets meanwhile have had a decent start to February, helped by some decent earnings from Google owner Alphabet and chip maker AMD.

RBAs Lowe was still more dovish than market expects, making it clear the end of QE does not mean an immediate interest rate rise is on the cards and is not certain inflation is sustainably within target range. Their commitment is still to full employment. This hasn’t stopped AUD taking a step higher, with AUDUSD at 0.7140 and AUDNZD 1.0755.

Putin has spoken out about the Ukraine crisis, blaming US and NATO for fuelling tensions in the region as they are not giving in to his demands. Putin has said EU will have a gas problem next year but made it clear Hungary would not face any similar issues. UK PM Johnson was in Ukraine yesterday and issued a joint statement with the Ukraine leader saying a Russian invasion would be a huge mistake with grave humanitarian costs.

EU inflation numbers this morning will have our attention, not much in the way of data this afternoon but for CAD watchers focus will be on comments from BoC Gov Macklem later in the day.

We will be releasing the results of the our currency purchase programs in the coming days. If I focus on the dollar purchase program, the most popular, it has really excelled over the past few months. While GBPUSD has been down in the doldrums, the program has consistently given participants a purchase rate well above spot. I do always stress, this is not designed as an outperformance model, instead it offers a low risk, smooth average rate over a period of time with limited MtoM swings and as such limited balance sheet impact.

At the risk of sounding like a broken record, I firmly believe that most firms would benefit if the program were utilised for a percentage of their currency requirements. I’ll be sending the results around soon but do feel free to contact me should you have any questions in the meantime.

- 10.00 EU CPI

- 13.15 US ADP employment

- 13.30 CAD building permits

- 15.00 BoCs Gravelle speaks

- 20.00 BoCs Macklem speaks

- 22.00 AUS commonwealth bank services PMI

- 00.30 AUS trade balance, building permits

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