Developments in the Asian and European session were important drivers of medium term USD strength. The BoJ shocked markets by increasing its QQE; while Eurozone’s flash CPI release unexpectedly fell to 0.7% y/y on core. The dynamics between the majors supports a strong USD; but raises concerns over the potential for an escalation in currency concerns broadly. Today’s release of U.S. PCE is important for judging the path of the Fed. Inflation to date has been well contained in the U.S.
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