Market sentiment towards the dollar is mixed as investors await the release of the US personal consumption expenditure deflator, a key inflation metric monitored by the Fed. Among the G10 currencies, the yen emerges as the strongest performer, posting a nearly 0.5% gain. Despite discouraging economic indicators suggesting a potential third consecutive quarterly contraction, investor attention pivots to remarks made by a BOJ board member hinting at a prospective exit from negative interest rates in the coming months.

Gold exhibits slight softness, remaining within the range seen yesterday, while April WTI crude oil prices remain relatively stable around $78.50.

Asia Pacific
Japan continues to grapple with economic challenges, with consumption witnessing a decline for the third consecutive quarter up to Q4 23. Additionally, January saw a significant 7.5% drop in industrial output, following a modest 1.2% growth throughout the previous year. However, the impact of these concerning figures is overshadowed by comments from Takata of the BOJ board, suggesting that despite economic uncertainties, the attainment of the "price target is finally coming into sight." Consequently, Japan's 10-year yield experiences an uptick, and the yen strengthens. Notably, the dollar slips below the 20-day moving average (~JPY149.80) for the first time since February 2, coinciding with US employment data.

The Australian dollar shows signs of stabilization after a nearly 1% decline yesterday but struggles to stage a full recovery.

Europe
Tomorrow's release of the preliminary estimate of the eurozone's February CPI is anticipated, with Bloomberg's survey projecting a 0.6% increase following January's 0.4% decline.
The euro briefly dipped below $1.08 at the outset of yesterday's European session, subsequently rebounding to just below $1.0850 before settling into a subdued trading range during North American hours. Despite a recent two-day decline, the euro remains positioned above the 200-day moving average, showing a generally firmer bias today as it inches towards $1.0855.

Sterling exhibits minimal movement, trading within a narrow range below $1.2675.

America
While US Q4 23 GDP saw a slight downward revision (3.2% vs. 3.3%), consumption figures were revised upwards (3.0% vs. 2.8%). However, yesterday's January data disappointed, with the advanced merchandise trade deficit widening to a six-month high of $90.2 billion and retail inventories rising by 0.5% following a 0.6% increase in December.
Today's attention is focused on personal income, consumption, and deflator figures.

Canada is set to report December and Q4 23 GDP.
The US dollar reached a new high for the year yesterday, surpassing the CAD1.3600 level early in North American trading before retracing and finding support near CAD1.3560.