The US dollar remains largely stable against G10 currencies but has softened slightly. Remarks by Bank of Japan Governor Ueda highlighted the possibility of a rate hike at this month’s meeting, pushing the yen to its strongest level since January 6. Meanwhile, the UK reported softer-than-expected consumer prices, though timing issues in data collection might have skewed the results. Despite this, the pound remains firm, and UK Gilts have rallied.
The focus in North America is on the Consumer Price Index (CPI). While the Producer Price Index (PPI) came in slightly softer than expected yesterday, PCE deflator-linked components showed resilience.
Equity markets are mostly higher, gold is approaching Monday’s high near $2,695, and WTI crude is consolidating around $77.25 after earlier declines.

Asia-Pacific Markets
BOJ Governor Ueda reinforced his deputy’s comments about a potential rate hike this month, appearing optimistic about upcoming wage negotiations. This spurred the swaps market to increase the odds of a hike, driving the yen higher. The dollar was sold off to nearly JPY156.70, marking its lowest point since January 6, when it hit JPY156.25.

European Markets
The euro extended Monday’s recovery, nearing $1.0315 and approaching the next target in the $1.0335–$1.0350 range.
The UK’s December CPI came in slightly below expectations, bolstering market confidence in a potential Bank of England rate cut next month.

American Markets
The market anticipates enough economic momentum to withstand current uncertainties. Although forecasts for 2024 rate cuts have slightly moderated, with 32 basis points priced in compared to 43 at the end of last year, inflation remains a focus. December CPI is expected to show a 0.4% monthly rise, translating to a 2.9% annual increase, up from 2.7% in November. Core CPI is projected to rise 0.2%–0.3%, keeping the year-over-year rate steady at 3.3%. Additionally, the Federal Reserve’s Beige Book will be released, which has gained prominence under Chair Powell’s leadership.