USD-index strengthened as Fed's Bullard downplayed the impact of a stronger currency on the US economy and the Fed's monetary policy. The afternoon saw a slew of US data releases with positive US core CPI and Durable Goods (Jan) M/M 2.8% vs. Exp. 1.6% which lifted the USD-index to trade at its highest levels of the week. Furthermore, this subsequently saw EUR/USD to break beneath 1.1300 and trade lower by over a point which was further exacerbated after sources reported US Tech funds selling the EUR which also weighed on EUR/GBP as the cross traded at lowest levels since Dec. 2007. Alongside the bid in the USD, a slide in T-notes bolstered yields which supported USD/JPY to trade above the psychological level of 119.00. Elsewhere, the encouraging Canadian CPI reading (Jan) Y/Y 1.0% vs. Exp. 0.8% briefly halted USD/CAD’s upside, however the weakness in WTI and stronger USD overshadowed the positive data as the pair trade tested the 1.25 handle.
Looking ahead, the data slate provides a raft of Japanese data releases tonight with CPI, Jobless rate and Retail Sales along with BoE’s Shafik, Fed’s Lockhart, Fed’s Fisher and ECB’s Linde due to speak.
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