Magna Financial Market Report – Wednesday 12th February 2025
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• USD slides on tariff warnings from Europe and Canada
• GBPUSD and EURUSD lifted by Trump’s comments
• US CPI in focus today
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RECAP
Despite Fed Chair Powell’s testimony to the Senate Banking Committee, the USD didn’t receive a lift, even though he emphasized the central bank’s patience and lack of urgency in reducing interest rates. His comments reaffirmed the Fed’s cautious approach to easing, but the USD’s weakness appears to be more of a technical pullback rather than a shift in policy. Market expectations now point toward a potential rate cut by the Fed in September. Meanwhile, the EUR showed strength earlier today, bolstered by the EU’s commitment to take firm action against any US-imposed tariffs, with Canada also voicing similar opposition.
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OUR SUMMARY
Today, the US CPI release is the key data point for the USD. With markets anticipating elevated US inflation due to tariff risks, a downside miss in CPI could prompt speculation about an earlier Fed rate cut, likely weakening the USD further. Conversely, a higher-than-expected CPI could push yields higher, leading to gains for the USD.
Risk sentiment has seen a slight uptick following Donald Trump’s comments suggesting progress in peace efforts between Russia and Ukraine, particularly after the release of an American teacher from Russian detention. As a result, both GBPUSD and EURUSD are continuing the upward momentum from yesterday.
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HOW WE CAN HELP
Our team of currency experts are here to help you get more from your money when making international payments. We will work with you to understand your payment needs and offer specialised guidance on the best options available to you. Get in touch with Osman Hanif today on +44 (0) 20 3371 9200 or email osman@magnafinancial.com
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