Markets are treading carefully as the dollar remains firmly in focus ahead of key economic data. With inflation expectations and Fed rate timing shaping sentiment, currency volatility could pick up quickly.
Key Highlight
- Today’s primary focus is the US CPI release.
Market Recap
The US dollar extended its recent decline, marking a fifth straight session of losses after jobless claims came in above expectations. The softer labour data has increased speculation around potential shifts in US policy expectations, weighing on the greenback.
Among major currencies, the Swiss franc outperformed, benefiting from the weaker dollar tone. In contrast, the Australian and Canadian dollars lagged behind their peers.
Sterling saw limited movement despite the morning’s UK GDP release, as markets appear reluctant to take strong positions ahead of next week’s inflation data, which is expected to provide clearer direction.
Market Overview:
Attention today is split between economic releases from the eurozone and the United States, though the US data is expected to carry greater weight for currency markets.
In Europe, fourth-quarter GDP is forecast to remain unchanged at 0.3% quarter-on-quarter and 1.3% year-on-year, alongside a December trade surplus of approximately €10.7bn. Unless the figures deviate meaningfully from expectations, the impact on the euro is likely to be limited, with global FX flows continuing to be driven primarily by developments in the US.
The key event of the day is the US inflation report. January CPI is expected to show a monthly increase of 0.3%, with both headline and core inflation sitting at 2.5% on an annual basis. Stronger-than-expected US employment data earlier this week has already pushed market expectations for the first Federal Reserve rate cut back to July. For the dollar to regain momentum, inflation would need to surprise to the upside and further delay easing expectations.
What This Means for Clients
- EUR movement is likely to stay contained unless eurozone data delivers a clear surprise.
- USD direction hinges on today’s inflation data, with upside risks supporting the dollar.
- Volatility may increase around the CPI release, making timing and risk management particularly important for USD exposures.
13th February 2026
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