The dollar is experiencing a generally stronger position today, although it is primarily in a phase of consolidation. The Japanese yen stands out as a significant exception. The greenback attained JPY156.85, marking its highest point since January 23, and appears to have not yet reached its peak. With Sunday’s election approaching, current polls indicate that Prime Minister Takaichi is guiding the LDP towards a robust performance, potentially regaining an outright majority. Earlier today, she cautioned that the Bank of Japan may not be relied upon to limit the increase in yields, as the potential cost could lead to an undesirable weakening of the yen. In the interim, the partial shutdown of the US government has concluded; however, the impact on economic data will continue to postpone the January employment figures that were scheduled for release on Friday. This could lend more significance to the ADP private sector jobs estimate today. Following the recent downturn, gold and silver have stabilized and continued to build on yesterday’s increase.

Following the low observed on Monday (approximately $1.1770), the euro achieved a slight session high in North America yesterday, nearing $1.1830. The euro increased to nearly $1.1840 today, surpassing the previous session’s high for the first time in six consecutive sessions. The soft final PMI data and an unexpected decline in core CPI appeared to limit the single currency just below $1.1850, where options totaling nearly 1.8 billion euros are set to expire today. Initial support is located within the $1.1780-$1.1800 range. A breach of $1.1760 may indicate the forthcoming downward movement. The dollar achieved a seven-session peak against the yen in North America yesterday, just above JPY156. Today’s follow-through buying propelled the greenback to JPY156.80, surpassing the technical retracement objective of JPY156.50 and the 20-day moving average (~JPY156.60) for the first time since January 23. The subsequent zone of chart resistance could potentially be located in the JPY157.40-50 range. Sterling fluctuated within Monday’s range (~$1.3625-$1.3715) yesterday. It increased to nearly $1.3735 today, aligning with the midpoint of the drop from the January 28 peak around $1.3850.

The subsequent retracement level is approximately $1.3765. The Bank of England convenes tomorrow. It is clear that it continues to be maintained at its current position. However, since the conclusion of the previous year, the likelihood of a reduction by mid-year has diminished. The market had approximately 30 basis points of cuts priced in, and is now slightly below 25 basis points. Yesterday, the US dollar exhibited an inside day in relation to the Canadian dollar as well. The greenback remained briefly above Monday’s settlement (~CAD1.3680). It continues to stay within Monday’s range thus far today aft. Following a decline to CAD1.3630 earlier, it has reverted to the range observed on Tuesday. The CAD1.3620 level represents the first retracement following the dollar’s rise from nearly CAD1.3480 prior to the weekend to just above CAD1.3700 on Monday. Options valued at approximately $375 million at a price of CAD1.3650 are set to expire today.

The Australian dollar reached a high of $0.7050 yesterday following the announcement of the rate hike. It experienced a stall and retraced to $0.6980 during the mid-morning trading session in New York. The price remains just under yesterday’s peak, maintaining a position above $0.7010 amid subdued trading activity. The Australian dollar reached its peak on January 29, just below $0.7100, marking a three-year high. A breach of the $0.6980 level could signal that the downward correction is reinitiating.