Central bank speakers take centre stage ahead of US inflation data tomorrow

Good morning

It was another quiet day in the currency markets yesterday with very little in the way of data comments to really get our teeth into. Lagarde said little of interest although ECBs Villeroy did suggest market reaction to the recent ECB meeting was too strong, however I am seeing more banks now looking for ECB rate rises through 2022 and 2023. EURUSD 1.1415 as I type, up a fraction from this time yesterday.

Feds Daly said Fed shouldn’t be overly aggressive on rate rises although did say that inflation will get worse before it gets better. We hear from Feds Bowman today, she has previously said she would be OK with a 50bps rate rise if inflation remains stubbornly high. US stocks were firm despite 10 year yields still sitting in the 1.90s.

We hear from BoEs chief economist Pill today who will be speaking on monetary policy. Pill voted for a 25bps rise at the last meeting, in line with the majority. GBPUSD currently 1.3560, EURGBP 0.8420 (GBPEUR 1.1875). We could see GBP higher against EUR if more ECB officials push back on the idea of rate rises but for now this seems unlikely and with some negative post-Brexit trade headlines doing the rounds, GBP will do well to hold at current levels.

The US Covid advisor Dr Fauci has said the US is nearly out of the fully blown pandemic phase and expects to see restrictions come to an end in the coming months. His comments come as the death toll in the US passes 900,000.

Not a great deal more to add today, we await the various central bank officials who are speaking today but I cannot help but think the markets are quietly waiting for the US inflation data that is due out tomorrow afternoon.

Back to the winter Olympics I guess…..

- 13.10 BoEs Pill speaks

- 15.00 US wholesale inventories

- 15.30 Feds Bowman speaks.

- 17.00 Feds Mester speaks

- 17.00 BoCs Macklem speaks

- 00.00 AUS consumer inflation expectations

- 00.01 UK RICS house prices