The dollar is mixed after overnight trading with the edge going to dollar weakness. Continued low volatility (currency volatility reached a 2-year low yesterday) limits the range of gains and losses, keeping most pairs rangebound. Top dollar losses are -0.41% vs. ZAR, -0.29% vs. NZD and -0.23% vs. CHF. The dollar index (dollar against a basket of currencies) is -0.06% at 104.02 (just above 104.00 support).
U.S. Treasury yields are lower in the longer tenors, 2-year yield -0.019% and 10-year yield -0.012% respectively.
Recent inflation data has lifted rates in Fed Funds Futures which now imply a Fed overnight target rate of 4.389% by year-end. The implied rate was 3.65% as recently as January 12th, or nearly a 75-basis point shift to higher rates. The minutes from the FOMC’s January 31st meeting will be released today at 2pm ET and will be scoured for any subtle shifts in the Fed’s outlook on rate policy.
U.S. Equity indexes have started the day lower, trading cautiously ahead of the FOMC minutes.
Oil is trading at $77.22/barrel, lower than yesterday’s close at $78.18 and its lowest point in a week. Lower oil is putting pressure on the Canadian dollar which has declined three consecutive days.
