ForexLive European FX news wrap: Dollar remains steady going into February home straight

Headlines:

• USD/JPY shows some life in final stretch of the week
• What is the distribution of forecasts for the US PCE?
• China banks reportedly called upon by PBOC to cut rates on dollar deposits
• BOE’s Ramsden: A gradual and careful approach is needed on rate cuts
• Bavaria February CPI +2.4% vs +2.5% y/y prior
• France February preliminary CPI +0.8% vs +1.0% y/y expected
• Italy February preliminary CPI +1.7% vs +1.7% y/y expected
• Germany January retail sales +0.2% vs 0.0% m/m expected
• Germany January import price index +1.1% vs +0.7% m/m expected
• Germany February unemployment change 5k vs 15k expected
• France Q4 final GDP -0.1% vs -0.1% q/q prelim
• China’s Politburo says will implement more proactive macro policy
• Japan PM Ishiba’s government cuts FY25/26 Budget plan to JPY 115.2tln

Markets:

• CAD leads, NZD lags on the day
• European equities lower; S&P 500 futures up 0.2%
• US 10-year yields down 2.7 bps to 4.259%
• Gold down 0.4% to $2,864.20
• WTI crude down 1.2% to $69.48
• Bitcoin down 4.8% to $80,258

There were not much major moves on the session but we’re certainly gearing up for some potential ones to close out the week/month later.

The dollar was steadier overall, holding gains following Trump’s renewed tariffs threat yesterday. EUR/USD is little changed, continuing to hug the 1.0400 level with large option expiries locking price action. Meanwhile, GBP/USD is also flat circling closer to the 1.2600 mark.

But there was some life in USD/JPY as the pair jumped above 150.00 and kept around 150.30-50 levels during the session. There wasn’t much to it with 10-year Treasury yields still flirting with a key downside break, so this may not be one that could hold out for too long. That being said, we still do have some key risk events to get through later in US trading.

The aussie and kiwi were already more subdued since Asia trading and stayed that way. AUD/USD is down 0.2% to 0.6220 with NZD/USD down 0.4% to 0.5605 currently. USD/CAD is holding its own, down 0.1% to 1.4425 in a session that offered little.

In terms of equities, European indices are lower but are recovering some poise after the opening drop. Overall, it’s still been a rocking month for stocks in Europe with the DAX helped out by the German election results from last weekend.

As for US futures, they are holding higher but there is still a sense of apprehension in the air. The selloff yesterday was notable and it’s definitely still weighing on the back of investors’ minds coming into today.

In other markets, gold is down yet again today and poised to snap its winning streak of eight consecutive weeks to end February trading. Meanwhile, Bitcoin is flirting with a key break under $80,000 with its 200-day moving average also appearing to give way – at least for now.

To close out the week/month, we’ll have to work through the US PCE price data and more Trump headlines later to sort things out before the weekend. Adding to that, month-end flows will also be something to watch out for. As such, keep an eye out for any added dose of volatility at the London fix later just in case.

This article was written by Justin Low at www.forexlive.com.