Forex Today: Inflation in the eye of the storm

Valeria Bednarik FXStreet

What you need to know on Friday, February 11:

Major pairs were quite volatile on Thursday following the release of US inflation figures. The US Consumer Price Index soared to 7.5% YoY in January, higher than the 7.3% expected. The core reading printed at 6%, also above the market’s forecast. The headline spurred a short-lived dollar’s rally, although the greenback quickly changed course and moved from daily highs to fresh weekly lows against most of its major rivals.

The EUR/USD pair peaked at 1.1394, a fresh 2022 high, stabilizing at the 1.1460 price zone. Earlier in the day, the European Commission raised its inflation expectations for this year from 3.5% but is still expecting it to decline in 2023, seeing it at 1.7%. Prices pressure was blamed on supply disruption and the energy crisis, exacerbated by geopolitical tensions between Russia and Ukraine. Also, Bundesbank Governor Joachim Nagel indicated that the European Central Bank might raise rates later this year.

The GBP/USD pair holds on to intraday gains just above the 1.3600 region after hitting a monthly high of 1.3643.

Commodity-linked currencies were unable to hold on to intraday gains. The AUD/USD pair is marginally higher at around 0.7180, while USD/CAD is up for the day, trading at around 1.2700.

RBA Governor Philip Lowe will testify at a virtual hearing before the House of Representatives Standing Committee on Economics and may refer to the monetary policy.

Crude oil prices ended the day little changed. The OPEC boosted its forecast for 2022 crude demand by 100K barrels per day but reported that output rose by 64K bpd in January, lagging the pledged increase by OPEC+. WTI trades at $89.60 a barrel.

Gold jumped to $1,841.83 a troy ounce but retreated towards the current 1,830 region.

Wall Street edged lower, with the DJIA shedding over 500 points. The poor tone of equities helped the greenback to recover some ground ahead of the daily close.

US Treasury yields soared. The yield on the US 10-year Treasury note soared to 2.02%, above the 2% threshold for the first time since 2019, while the 2-year note yielded as much as 1.51%. Following the release of inflation data, the chances of a rate hike of 50 basis points in March rose to nearly 50%.

Top 3 Price Prediction Bitcoin, Ethereum, Ripple: Cryptos set for fireworks this weekend

Like this article? Help us with some feedback by answering this survey:

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

AUD/USD regains mild traction, falters near 0.7150

AUD/USD gathers some steam and manages to flirt with the 0.7150 level on Thursday. However, the pair has retraced some of Wednesday’s significant pullback due to renewed selling pressure on the Greenback and a slight improvement in risk sentiment following hopes of a deal in the Middle East. Wrapping up the Australian docket, the RBA’s Hauser will speak early on Friday.

USD/JPY: Japanese Yen coiled at the line, leaning on everyone but Japan

The Yen is doing very little, and that stasis is the whole story. USD/JPY sits glued near 160.00 not because Japan has found new strength, but because two outside forces are fighting to a draw over it: a US rate complex that keeps the dollar bid, and a Ministry of Finance that refuses to let the line break.

Gold puts its 200-day SMA to the test near $4,420

Gold keeps the bullish stance in place in the latter part of Thursday’s session, although a convincing break above the key $4,500 mark per troy ounce still remains elusive. The precious metal’s advance comes amid the resurgence of some selling interest around the Greenback, improving risk sentiment, and declining US Treasury yields across the board.

Bitcoin falls below $64K as demand turns negative, short-term holders' selling intensifies

Bitcoin has fallen below $64,000 on Thursday amid weakening market demand and mounting selling pressure from short-term holders. The leading cryptocurrency slipped toward the $63,000 level amid a broader risk-off environment, with several key metrics signaling one of the most challenging periods of the current market cycle.

Nonfarm payrolls: Testing the limits of Fed policy patience

The upcoming nonfarm payrolls report for May will provide the final update on the US labor market before Kevin Warsh attends his first policy meeting as the new Fed Chair later this month.

Recession on paper: What really moves the Canadian Loonie now?

Statistics Canada handed the headline writers a gift and the analysts a headache. Real GDP shrank 0.1% on an annualized basis in the first quarter, and with the fourth quarter of 2025 revised down to a 1.0% contraction, that is two negative quarters in a row, the textbook definition of a technical recession and Canada's first since the pandemic.