The U.S. dollar was lower against most of the majors on views that the Fed's accommodative stance is likely to persist while other central banks take a more hawkish tone in the face of higher global inflation. Euro zone CPI was released and while it saw a slight unexpected drop to 2.3% from the prior 2.4% (cons. 2.4%), the figure is still above the ECB's 2% target. This fuelled speculation that the bank will take a more hawkish stance ahead of the European Central Bank's meeting later this week. EUR/USD climbed to session highs of nearly 1.3845/50 after trading as low as around 1.3710 earlier in the session. The pair is currently around 1.3830. New Zealand's Jan. trade balance came in better than expected with a surplus of 11M while the market was anticipating a deficit of -25M from the prior month's -264M. This gave a slight boost to the kiwi, however the rally was short lived as NZ Finance Minister English said that economic growth will be slower in H1 as a result of last week's tragic earthquake. He went on to note that the gov't will bear the cost of rebuilding and will take on more short term debt. NZD/USD is currently trading around 0.7520, down from earlier highs of around 0.7550.
Asian stock markets were mostly higher and European bourses are currently mixed. Commodities are up on a softer greenback with gold and silver currently up by about +0.19% and +0.55% respectively. Oil is gaining by about +0.49% and may continue to respond to ongoing developments in the Middle East.
On the data front for the upcoming NY session, Canada's 4Q current account and GDP is set for release as well as U.S. Jan personal income and spending, and the PCE deflator. The Feb. Chicago PMI, NAPM-Milwaukee, Dallas Fed manufacturing activity and Jan. pending home sales are also due out. NY Fed President Dudley is set to speak.
