Headlines:
- HSBC now sees 50 bps rate hike by the Fed in March
- Russia says cannot accept EU, NATO response to Lavrov's letter
- PBOC says monetary policy will be flexible, appropriate
- Germany to lift some restrictions next week as COVID-19 peak is in sight
- UK Q4 preliminary GDP +1.0% vs +1.1% q/q expected
- Switzerland January CPI +1.6% vs +1.5% y/y expected
- Germany January final CPI +4.9% vs +4.9% y/y prelim
Markets:
- GBP leads, EUR lags on the day
- European equities lower; S&P 500 futures -0.1%
- US 10-year yields down 2.6 bps to 2.003%
- Gold up 0.2% to $1,830.80
- WTI up 1.5% to $91.22
- Bitcoin down 0.3% to $43,627
The market continues to decipher the mood music after seeing the hottest US consumer inflation in 40 years yesterday.
The dollar was initially stronger but gains have been trimmed somewhat and the greenback is trading more mixed now. This comes as a 50 bps rate hike by the Fed for March is pretty much more or less fully priced in at this point.
EUR/USD fell to 1.1370 early on before recovering to 1.1400. Meanwhile, GBP/USD was down at 1.3520 before staging a solid bounce to 1.3570-80 levels currently.
Commodity currencies have also made some decent headway with AUD/USD rebounding from 0.7110 to 0.7150 and NZD/USD from 0.6630 to 0.6670 at the moment.
Equities remained heavy though and is somewhat more sluggish although losses have been trimmed somewhat in the past half-hour. S&P 500 futures were down as much as 0.9% earlier but are now down by just 0.1%.
Elsewhere, oil continues to keep a decent bounce on the day with WTI back above $91. The high yesterday hit $91.72 so that will be a notable short-term resistance level to watch before the weekend.
There isn't much else on the agenda so it will all come down to how the market continues to digest the situation after yesterday.
