ForexLive European FX news wrap: Dollar mixed, ECB up next

Headlines:

• ECB set to wrap up the central bank bonanza this month
• Weekly update on interest rate expectations
• The bond market is in focus as yields edge lower
• A clash in month-end FX rebalancing signals this month – Deutsche
• BOJ’s Himino says will raise rates if economy, prices move in line with forecast
• Eurozone January final consumer confidence -14.2 vs -14.2 prelim
• Eurozone Q4 flash GDP +0.0% vs +0.1% q/q expected
• France Q4 preliminary GDP -0.1% vs 0.0% q/q
• Germany Q4 preliminary GDP -0.2% vs -0.1% q/q expected
• Italy Q4 preliminary GDP +0.0% vs +0.1% q/q expected
• Spain January preliminary CPI +3.0% vs +2.9% y/y expected
• Germany December import price index +0.4% vs +0.3% m/m expected
• UK December mortgage approvals 66.53k vs 65.40k expected

Markets:

• JPY leads, EUR lags on the day
• European equities higher; S&P 500 futures up 0.2%
• US 10-year yields down 6.3 bps to 4.492%
• Gold up 0.8% to $2,779.53
• WTI crude down 0.2% to $72.48
• Bitcoin up 1.2% to $104,972

The dollar is keeping more mixed in European morning trade, with little significant headlines to really move markets.

Traders are still digesting the Fed decision from yesterday but all in all, there wasn’t too much to really scrutinise as noted here. USD/JPY is a decent mover on the day, lower by 0.6% to 154.30 but it owes to a drag in bond yields. 10-year Treasury yields are flirting with a drop below 4.50% and that’s keeping pressure on yen pairs today.

Besides that, the dollar is trading mostly little changed or marginally higher against the rest of the major currencies. EUR/USD is down 0.2% to 1.0395 while GBP/USD is down 0.2% to 1.2430. USD/CAD is down 0.1% to 1.4410 while AUD/USD is down 0.1% to 0.6225 currently. The changes across the board aren’t reflective of much as we await US traders to enter the fray.

We did get euro area Q4 GDP data and those reaffirmed poor showings in France and Germany, that led to a stagnation in the Eurozone economy in the final quarter of 2024. It is as anticipated and won’t mess up expectations for the ECB ahead of their policy decision later.

In other markets, equities are keeping steadier after the drop in Wall Street yesterday. European indices are looking to close out the month on a high note while US futures are also sitting higher, hoping to bounce back in this back and forth week.

Elsewhere, we do have gold nudging closer to test its October high near $2,790 while Bitcoin is still floating above $100,000 in search of its next momentum leg over the last week-and-a-half.

This article was written by Justin Low at www.forexlive.com.