The EUR/USD has recovered to the 1.08 range, likely due to position adjustments. Additionally, the strengthening of Chinese stocks amid regulatory measures and the lowering of loan rates has bolstered the yuan and resulted in consecutive gains in the Chinese stock market. Recently, the NZD has shown the strongest performance against the USD, with concerns about inflation and expectations of additional rate hikes being discussed. There seems to be a plethora of secondary factors contributing to the USD selling pressure.
On the other hand, the situation in the US remains uncertain. While the latest US inflation data indicates a downward trend, there are still indications of persistent service inflation. Market expectations for an early rate cut appear to be diminishing.
In such a scenario, today’s release of the FOMC meeting minutes will be crucial. If the minutes emphasize a downward trend in inflation and suggest actions like rate cuts (or if the market perceives them as such), it could lead to further USD selling pressure. Conversely, if there’s a focus on persistent wage and service inflation concerns, highlighting the need to maintain the current high-interest rates, it could temporarily ease USD weakness.
In the US stock market, NVIDIA’s earnings announcement is scheduled for early tomorrow morning Japan time. As a leader in AI-related stocks, it has attracted attention, with reports suggesting that its market capitalization has surpassed that of Amazon. While it enjoys considerable popularity, it’s important to monitor the after-hours trading following the earnings announcement.
Scheduled economic indicators in overseas markets include UK public sector net borrowing (January), South Africa’s consumer price index (January), US MBA mortgage applications index (02/10 – 02/16), and Eurozone consumer confidence index (preliminary) (February).
Regarding speeches and events, speeches or participation by officials such as Bostic, President of the Atlanta Fed, Dingra, MPC member of the Bank of England, Barkin, President of the Richmond Fed, and Collins, President of the Boston Fed, are scheduled. Auctions for US 20-year bonds ($16 billion) and US 2-year floating-rate notes ($28 billion) will also take place.
As mentioned earlier, market attention is expected to be focused on the FOMC meeting minutes and NVIDIA’s earnings.
Given the potential significant impact of the FOMC meeting minutes, it’s essential to exercise caution as USD may experience significant movements. USD selling may see some buybacks amid pre-adjustment expectations.
