The USD has traded sideways during the Asian session, leaving the dollar index (DXY) currently around 78.00. Asian equities have been mixed, with the Hang Seng up 1.1%, Shanghai Composite down around 0.9%, and the Nikkei roughly flat on the day. The release of the BoJ minutes yielded little in the way of new insight or FX volatility, and USDJPY has been constricted to a 83.23 - 83.54 range. Yesterday's data calendar was packed with economic releases; starting with a number of key data points out of Scandinavia.
Norwegian GDP was somewhat muddled, as the headline figure beat estimates convincingly at 2.4% QoQ (vs. 1.7% expected), but the mainland figure (which excludes oil production) actually undershot forecasts, showing growth of a mere 0.3% QoQ (vs. 0.9% expected). Later on, comments from Norges Bank Governor Olsen included acknowledgement that low inflation prospects suggest a low interest rate, but he did add that the key policy rate should not be kept low for too long. Meanwhile, Swedish CPI just missed estimates, coming in at 2.5% YoY (vs. 2.6% expected), but it is notable that this figure still lies some way above the Riksbank target rate of 2.0%. Going forward, we feel that both NOK and SEK will be strong outperformers in the currency space.
Adding to the debate about the prospects for BoE tightening, MPC member Sentance weighed into the discussion yesterday with extremely hawkish rhetoric. He openly contradicted Wednesday's quarterly inflation report asserting that the forecasts were overly optimistic and that inflation was unlikely to subside quickly. GBPUSD was naturally buoyed by the news, especially so after he stated that the UK would need more hikes than the market currently has priced in. Today watch for UK retail sales data at 09:30 GMT to stoke further volatility in GBP; consensus is looking for a strong rebound in January to 0.5% MoM, 4.0% YoY, after last month's disappointing -0.8% MoM, 0.0% YoY figures.
In the US, CPI rose more than anticipated yesterday to 0.4% MoM but disappointingly, jobless claims leapt higher to 410k (continuing clams up to 3911k). The Philadelphia Fed manufacturing survey also climbed to 35.9 from 19.3. No further US releases are scheduled today, but both Bernanke and Geithner will be speaking in Paris later this afternoon.