American FX Outlook: Fed’s Mester in the spotlight

What you need to know before markets open:

• The UK inflation failed to meet the expectations of decelerating to 2.9% in January and remained at December’s 3.0% y/y.
• Only minor data scheduled for the US with Loretta Mester, the FOMC voting member in 2018,  headlining the agenda.
• European equities fell following the Japanese pattern with markets seeking stability after last week’s rout. The dollar weakened against most major currencies as the yen soared and Treasuries climbed.

Tuesday’s market moving events

• The US small business optimism is expected to 106.2 in January from 104.9 in December.
• Cleveland Federal Reserve President Loretta Mester is set to speak at the Dayton Area Chamber of Commerce Government Affairs Breakfast Series in Dayton, Ohio at 13:00 GMT.
• The New Zealand food price index is set to increase by 0.2% m/m in January after falling -0.8% m/m in December.
• Japan’s GDP is expected to rise 0.2% Q/Q while rising 0.9% over the year on an annualized basis.

Major market movers

• The US Dollar eased slightly from the last week’s highs as global equity markets stabilized on Tuesday and the economic calendar remained empty of an important event.
• The Japanese Yen has strengthened across the board on speculation that the Bank of Japan Governor may be reappointed for the second term and the risk aversion rise as the Japanese equities fell at the close after the initial spike higher.

Earlier in Asia/Europe

• French non-farm payroll rose 0.3% Q/Q in the final quarter of 2017.
• The UK CPI remained at 3.0% in January, unchanged from December.
• The UK retail price index rose 4.0% in January.
• Asakawa, Japan's  Vice Finance Minister for International Affairs, said that he will closely monitor whether the recent JPY rises are speculative.