The Reserve Bank of New Zealand's less hawkish stance and Australia's January CPI figures coming in slightly softer than expected have ignited a significant rally in the US dollar. The Dollar Index has surged by nearly 0.25%, with most of the gains observed in the Asia Pacific region.
While the dollar has stabilized during the European morning, equity markets are experiencing pressure. With the exception of South Korea, major markets in the Asia Pacific have witnessed sell-offs. In Europe, the Stoxx 600 has retreated from yesterday's gains of nearly 0.2%. US index futures are showing modest weakness following a mixed performance yesterday.
The strengthening dollar has exerted downward pressure on gold prices, which had briefly surpassed $2039 yesterday before settling lower. Today, follow-through selling has pushed it below $2025. April WTI crude oil is trading softer around $78, remaining within yesterday's range.

Asia Pacific
Japan's slightly stronger than anticipated January CPI has reignited speculation of BOJ rate hikes, especially after concerns were raised by an unexpected economic contraction in Q4 23. Tomorrow's data release may swing sentiments again, with fears mounting over another quarterly contraction.

The Reserve Bank of New Zealand kept rates unchanged as expected but struck a less hawkish tone than before.

The dollar has retraced to JPY150.80 late in the Asia Pacific session and encountered selling pressure early in Europe, hovering around JPY150.50 for the past five sessions.
The Australian dollar hit a five-day low near $0.6525 yesterday, rebounded, but stalled around $0.6560. Today, it has dipped to $0.6490, marking its lowest level since February 15.

Europe
The euro briefly reached a marginal three-day high in Asia Pacific trading on Tuesday before sliding in Europe and North America to just below $1.0835. It managed to hold above the key five- and 200-day moving averages, which converge near $1.0830. Further selling pressure today briefly pushed it below $1.08 in early European trading before finding support and rebounding towards $1.0820.

Sterling, after recording its third consecutive inside day yesterday, broke down today, dropping to nearly $1.2620 in early Europe before recovering to almost $1.2650. However, it remains within last Thursday's range.

America
Market reactions to GDP revisions are typically muted, and the second look at Q4 23 US GDP is not anticipated to see significant changes. Investors and businesses are more focused on forward-looking indicators, particularly Q1 24 GDP. The Atlanta Fed's GDP tracker, updated yesterday to 3.2% from 2.9% on February 16, provides some optimism. Additionally, January trade and inventory data are awaited, along with tomorrow's personal income, consumption, and deflator figures.

The US dollar has largely remained within the range set against the Canadian dollar on February 13.