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Weekly FX Chartbook: US and UK disinflation story in focus, watch for ECB split widening

Forex 5 minutes to read
Charu Chanana
Charu Chanana

Chief Investment Strategist

Summary:  US disinflation will be the key focus as CPI and PPI is released, but dollar dips could continue to find buyers amid US exceptionalism and carry advantages. Japanese yen risks touching 150, and risks of verbal intervention could make traders cautious around these levels. Meanwhile, a plethora of UK data and ECB speakers could steer focus towards bringing rate cut expectations forward for their central banks.

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NZD outperformed last week as rate hike bets jumped, but slowing inflation expectations could erase the move this week. Meanwhile, Swiss franc is weakening on the back of expected SNB selling and inflation report could be key.
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Our FX Scorecard shows sharp negative momentum in CHF and JPY, and momentum shifting negative for NZD, EUR as well as CAD and GBP.
13_FX_Positioning
Forex COT to the week of Feb 6 saw dollar shorts being erased as EUR net long touched its lowest levels since October 2022. Shorts were also added to AUD, CAD and CHF.
13_FX_Views

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Other recent Macro/FX articles:

13 Feb: Global Market Quick Take - Asia
9 Feb: Japanese Yen is throwing a warning
8 Feb: FX 101: USD Smile and portfolio impacts from King Dollar
5 Feb: Weekly FX Chartbook: More and more reasons to stay long US dollar
1 Feb: FOMC out, BOE and NFP next – will the hawkish waves continue?
30 Jan: USD remains a tough sell even with a dovish Fed outcome
29 Jan: Weekly FX Chartbook: Earnings and geopolitics to take the focus away from Powell
25 Jan: US PCE Preview: March rate cut bets could pick up again
24 Jan: Markets could start to price in a Trump presidency
24 Jan: ECB Preview: Will EUR pay heed to the pushback to April cut expectations?
23 Jan: Podcast: Central banks and key figures run the show
22 Jan: Video: The Curious Investor - Q1 2024 FX and Commodities Outlook
22 Jan: Weekly FX Chartbook: Soft-landing hopes and US exceptionalism will remain at play
19 Jan:  A reality check on Bank of Japan’s policy normalization and JPY appreciation expectations
15 Jan: Weekly FX Chartbook: UK data will be a test of GBP resilience
12 Jan: Markets ignore CPI uptick, Mideast tensions could fuel haven and oil-related FX
9 Jan: FX Quarterly Outlook: High yielding currencies will start to lose their appeal
9 Jan: US CPI Preview: Markets could be sensitive to an upside surprise
8 Jan: Macro and FX Podcast: Upcoming US CPI figures, USD momentum, and musings on China
8 Jan: Weekly FX Chartbook: Room for tactical gains in USD

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