US Dollar Gains vs Euro and Yen, Slips Against Pound Ahead of Fed Minutes

Investors and forex traders are focused on comments from U.S. Federal Reserve officials. Yesterday, Chicago Fed President Austan Goolsbee said the regulator could approve several more rate cuts this year if inflation resumes a steady move toward the 2.0% target, adding that January’s decline in the consumer price index to 2.4% should not be fully taken into account, as services inflation remained elevated at 3.2%. According to him, the overall indicator has stabilized near 3.0%, a level at which borrowing costs should also be anchored. Fed Governor Michael Barr noted that, given current conditions and incoming data, policymakers should refrain from adjusting monetary policy for some time to assess the impact of previously adopted measures. San Francisco Fed President Mary Daly said the regulator must continue to facilitate a decline in inflation and ensure that labor market vulnerabilities—reflected in job growth being concentrated in a narrow range of sectors—do not turn into broader imbalances. At 21:00 (GMT+2), the minutes of the latest FOMC meeting will be released, at which officials kept the policy rate in the 3.50–3.75% range. Traders hope the report will reveal a range of views among policymakers as well as signals on future actions, with most experts expecting no more than two rate cuts this year.

Eurozone

The euro is strengthening against the yen but weakening against the pound and the U.S. dollar.

According to the Financial Times, European Central Bank President Christine Lagarde may step down before the end of her term to allow outgoing French President Emmanuel Macron to influence the choice of her successor ahead of next year’s presidential election. ECB representatives denied these reports, stating that Lagarde remains fully focused on her mandate and has made no decision on the matter. Nevertheless, analysts have begun speculating on potential successors, with the most frequently mentioned candidates including former Dutch central bank governor Klaas Knot, Bank for International Settlements General Manager Pablo Hernández de Cos, and Bundesbank President Joachim Nagel.

United Kingdom

The pound is strengthening against the euro, the yen, and the U.S. dollar.

Investors are focused on January inflation data. The consumer price index is expected to fall from 0.4% to –0.5% month-on-month and from 3.4% to 3.0% year-on-year, in line with forecasts. Core inflation is projected to decline from 0.3% to –0.6% month-on-month, missing expectations of –0.7%, and from 3.2% to 3.1% year-on-year instead of 3.0%. Although the core measure excluding food and fuel remains relatively high, the broader index has reached March lows, reinforcing expectations of a return to a more dovish stance by the Bank of England. The probability of a 25-basis-point rate cut in March is currently estimated at 90.0%, with at least one additional easing expected by year-end.

Japan

The yen is weakening against the euro, the pound, and the U.S. dollar.

This negative trend is unfolding despite positive January foreign trade data from Japan. While imports fell by 2.5% instead of the expected increase to 3.0%, exports surged to a three-year high of 16.8%, exceeding forecasts of 12.0%, driven by a sharp rise in shipments to China ahead of the Lunar New Year. The trade deficit amounted to 1,152.7 billion yen, significantly smaller than the projected 2,142.1 billion yen. Meanwhile, the International Monetary Fund stated that Japan’s economy has shown impressive resilience to global shocks but warned that risks are skewed toward slower growth due to uncertainty in relations with the U.S. and China. A sharp tightening of financial conditions could undermine consumer confidence and domestic demand, while low consumption remains the main internal headwind.

Australia

The Australian dollar is strengthening against the yen but weakening against the pound, the euro, and the U.S. dollar.

Data released today showed that wages growth in the fourth quarter remained at 0.8% quarter-on-quarter but accelerated from 3.3% to 3.4% year-on-year. Private sector wage growth reached 3.4%, while public sector wages rose to 4.0%, the highest level since mid-2024. Analysts note that, based on this data, officials at the Reserve Bank of Australia could return to a more hawkish tone in May, with investors currently assigning a 60.0% probability to such a shift.

Oil

Oil prices are rising sharply today after Russian-Ukrainian peace talks in Geneva collapsed just two hours after they began. Investors fear that a compromise is unlikely, reducing the prospects of sanctions being lifted and Russian oil supply increasing in the near term.

At the same time, some progress has been reported in U.S.–Iran negotiations over a nuclear deal, according to Iranian Foreign Minister Abbas Araghchi, who cautioned that a final agreement should not be expected anytime soon. Later today at 23:30 (GMT+2), investors will watch the weekly U.S. fuel inventory report from the American Petroleum Institute (API). Previously, inventories rose by 13.4 million barrels, and a continuation of this trend could put pressure on energy prices.