The Dollar bounced back yesterday initially due to dovish comments from ECB council member Erkki Liikanen. Liikanen was cautious in saying that there are currently no significant indicators that inflation in the Eurozone will exceed the 2% target any time soon and monetary policy would not be tightened until these indicators are present. The Euro also suffered on the back of both Spanish Flash CPI and M3 Money Supply missing target.
Widespread reports that China’s Vice-Premier, Liu and the US Treasury Secretary, Mnuchin have been in communication to avoid a ‘tit-for-tat’ trade war can also be attributed to the strengthening of the Greenback, with both men looking for a mutually beneficial solution to recent tensions. Data-wise, CB Consumer Confidence came in below the consensus figure, with the Pound and Euro both recouping some of their early losses.
With a lack of data out, Cable jumped higher this morning following reports of an impending deal on the Irish border issue. Later today, the final US GDP figure for Q4 will be released with an expected reading of 2.7%, up 0.2% from the previous figure. Other potential Dollar movers include the release of the Pending New Home Sales data, where the figure is predicted to be a positive increase on last months, and Fed member, Bostic speaking at the Atlanta Society of Finance and Investment Professionals luncheon.