Citi

The market in Asia was briefly rattled on headlines around a further escalation in Australia-China tensions. This saw AUD knee jerk lower towards the 0.7700 handle, with this having a knock-on effect on NZD, select EM pairs and Chinese equities too. However, the market has begun to fade headlines here as they do not so far represent a significant shift in crucial iron ore import/export patterns between the two countries as we argued here.

Headline risk in the day ahead is unlikely to diminish though, with USD jobless claims, elections and the BoE in GBP, and a NOK rate decision due too (holds). EUR also looks to Germany factory orders, Eurozone retail sales and snippets of ECB speak (including Lagarde). In EM, we await three rate decisions across MYR, TRY and CZK (holds).

BoE: CitiFX Strategy sees the BoE as less exciting today. Adam Pickett writes that we see a reasonable chance that the BoE do message a technical QE taper, in line with the base case of our colleagues in Citi Economics. We also see plenty of reasons to wait. We think FX is only going to care if the nature of the ‘taper or no taper’ debate at the April meeting bears much relevance to the overall direction of monetary policy, especially on the risk of earlier rate hikes. We expect the BoE to lean on the stock of purchases being more important than the flow, which makes a taper almost entirely operational in nature.

Natixis

Dollar near two-week high as U.S. jobs data eyed for Fed clues

Blockbuster payrolls report Friday may further buoy greenback Loonie near three-year high, helped by oil price gains Australia's dollar slips amid worsening China relations. Ether near record high after rallying almost 800% this month.

The dollar hovered near a two-week high on Thursday, consolidating ahead of a key U.S. jobs report that may provide clues on when the Federal Reserve will dial back monetary stimulus.

The greenback has rebounded from a one-month low over the past week, swung by U.S. economic data that has largely supported the case for a rapid recovery from the pandemic, with traders weighing whether a lift in inflation may force the Fed's hand earlier than policymakers have so far suggested.

The Canadian dollar traded near a three-year high, buoyed by oil price gains, while the Aussie slipped amid a deterioration in Australia's relationship with China.

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