President Trump’s address to congress last night turned out to be a non-event for currency markets after failing to deliver much-sought specifics on tax cuts and infrastructure spending. The President mentioned both items, but lacking any particular details investors have rekindled their focus on the Fed.

San Francisco Fed President John Williams said in a speech yesterday that the current climate merits “serious consideration” of raising interest rates in the Fed’s next meeting in March. Bets for a 0.25% rate hike at this meeting have surged to a 70% probability according to Reuters data.

The DXY US dollar index surged to the highest levels since January 10th this morning, fueled by Fedspeak and with a nod to PCE inflation figures (the Fed’s preferred measure of inflation) which came in above consensus expectations to an annualized 1.9% in January. ISM Manufacturing PMI also came in above analyst expectations and at the fastest pace since August 2014 which reflects optimism in business sentiment. Beige book at 2 pm EST will shed light on the Fed’s take on the private sector.

The Bank of Canada left rates unchanged in their policy decision this morning, taking on a cautious tone. They downplayed better data such as rising inflation, emphasizing the uncertainties ahead. The press release noted that the Governing Council “remains attentive to the impact of significant uncertainties weighing on the outlook.” The comments are weighing on the loonie.

EURUSD:   Euro weaker as investors throw their weight behind the USD.

GBPUSD:  Sterling weaker as the dollar gains across the board.

AUDUSD:  Aussie dollar weaker despite better than expected GDP growth as USD gains.

CADUSD:  Canadian dollar took a hit after the Bank of Canada took on a dovish tone.

USDJPY:  Yen is the biggest loser to the strong USD this morning among major currencies.