The New Zealand dollar emerged as the strongest among the G10 currencies, showing a robust increase of about 0.25%. Meanwhile, the Japanese yen held firm against the US dollar, with the JPY151.25-35 low set earlier this week remaining intact. The market witnessed significant movements in the currency exchange landscape, with varied performances across different currencies. The US dollar recorded a session high, slightly below CAD1.4215, following Canada's Consumer Price Index (CPI) report yesterday.
In recent developments, the US dollar peaked last week near JPY154.80 and reached JPY151.25 yesterday. Daily momentum indicators suggest that these levels are getting stretched, indicating potential shifts in market dynamics. The Canadian CPI's core measures for January were firmer than expected, leading to a market downgrade of the chances for an interest rate hike at next month's meeting to about 35%, down from nearly 50% on Monday. This economic data played a crucial role in shaping currency movements.
Exports have shown a notable increase of 7.2%, driven primarily by autos and ships. This growth underscores the resilience of certain sectors within the global economy. In the European morning, the euro slipped through $1.0425, which corresponds to the 38.2% retracement of its recent gains, reflecting ongoing volatility in the currency markets.
The US dollar has mostly traded within a range between CNH7.2350 and CNH7.3700 since December 2024. China's real estate market exhibited signs of slowing down, with new home prices falling by 0.07% in January, marking the first decline since June 2023. Additionally, used home prices slipped by 0.34%, slightly faster than in December. This downturn in property prices may have implications for the broader economic landscape.
Exports to the US rose by 8.1%, with a sharp increase in auto exports potentially preempting impending tariffs. This boost in exports highlights strategic economic maneuvers amid changing trade policies. The Dollar Index has established a modest support level near 106.55, although recent upticks have not been particularly impressive. In contrast, the Australian dollar experienced fluctuations between approximately $0.6340 and $0.6360 during the North American session yesterday.
The Japanese economy faced a significant shortfall of JPY2.76 trillion (~$18.1 billion), marking the largest deficit in two years. This financial gap poses challenges for economic stability and may influence future fiscal policies.