Comments from Fed’s Bullard overnight hinting at tapering timelines being tied to vaccination progress appear to have supported the USD in Asia hours after a mixed Monday session. AUD, NZD and CAD are seen as the main underperformers in G10, while EM also sees various high beta currencies on the back foot too. Looking ahead to today, headlines around the Fed are likely to intensify with USD CPI the main print of the day, along with Fedspeak from Harker, Barkin, Daly, Mester, Bostic and Rosengren.

Elsewhere, GBP looks to GDP, IP and trade data, while EUR awaits the Germany/Eurozone ZEW survey. In EM, PLN current account and BRL retail sales feature.


EUR: The euro hovered around 1.1900 for yesterday’s session. Not a surprise that we are consolidating given the USD sell off in the last week as we run into a busy few days for US economic data which is expected to show further signs of strength. So a test for the recent run up in the euro and although it holds in relatively well there is a lack of progress beyond 1.19 also.

I have been looking for euro higher overall in the last week and whilst I retain that bias I reduced a little yesterday for prudence going into the data. Price action will be interesting to see if the US data is strong whether the euro can hold up or we head back to familiar ranges. Back below 1.1860 now in the short term should alleviate topside pressure and a break of 1.1930 would set up a test of 1.1970/90 area, the March rebound highs.

GBP: Sterling stopping the rot somewhat yesterday failing to make a lower low against Euro maybe it was due to the next stage of the reopening or maybe positioning is starting to get back to a more manageable level either way, activity was pretty quiet.

Data dump this morning did not spark any movement with GDP in line, IP better but trade wider, there may be some concerns on a fresh cluster of SA related variant in a few South London boroughs but the papers are mainly focusing on the over 50s vaccination target being beaten by a few days. Do not really have a strong view in sterling for now but would be looking to pick up cable tactically on a 1.36 handle still – US CPI the event of the day.

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