ForexLive European FX news wrap: Dollar holds steady, UK inflation ticks up

Headlines:

• US-EU trade talks one to watch later in the day
• China says willing to work with US to resolve trade concerns through dialogue
• ECB’s Schnabel: We are getting closer to a point where we pause or halt cuts
• ECB’s Panetta: Signs of weakness in Eurozone economy are more persistent than anticipated
• BOJ’s Takata: We have no preset idea on timing, level of future rate hikes
• BOJ’s Takata: Long-term interest rates moving in line with state of Japan’s economy
• UK January CPI +3.0% vs +2.8% y/y expected
• Eurozone December current account balance €50.5 billion vs €34.6 billion prior
• US MBA mortgage applications w.e. 14 February -6.6% vs +2.3% prior

Markets:

• NZD leads, GBP lags on the day
• European equities lower; S&P 500 futures down 0.1%
• US 10-year yields up 2.2 bps to 4.565%
• Gold flat at $2,935.83
• WTI crude up 0.9% to $72.48
• Bitcoin up 1.3% to $96,300

It was a mixed session as markets are taking a bit of a breather this week from all the turbulence since Trump’s inauguration.

Tariff threats remain in the picture but we still have some time to work that out over the next few weeks. For today though, the dollar continues to find itself in a steadier spot on the week. There’s little catalyst in terms of headlines but with yields holding up, it is keeping the dollar afloat as well.

EUR/USD is down 0.2% to 1.0428 with GBP/USD down 0.2% as well to 1.2583. The latter touched a high of 1.2640 during the session after the hotter UK CPI report. However, that has some caveats with a rebound in airfare prices and the introduction of VAT on private school fees skewing the readings. The monthly figures hinted at the opposite, reflecting negative readings in January. So, there’s that.

Besides that, USD/JPY is down just 0.1% to 151.90 despite higher yields while NZD/USD is up 0.2% to 0.5710 but off earlier highs of 0.5730 from after the RBNZ rate cut.

In other markets, European stocks are pushed down as the winning streak since the start of the year looks to be challenged. ECB policymaker Schnabel’s comments about perhaps debating to pause rate cuts is something to note.

As for US futures, things are calmer as they are keeping relatively flat as we await the Wall Street open. Coming up later in the day, there will be US-EU trade talks to watch out for as well.

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