- The GameStop saga is drawing to a close but US officials are not letting their guard down; no concrete regulatory action is expected to emerge near-term as markets are on a “normalizing” path; we get some final clues for Friday’s jobs data; efforts to pass the next relief bill continue; US Treasury will release details of its quarterly refunding
- Mario Draghi may be Italy’s new Prime Minister; eurozone reported final January services and composite PMIs and January CPI; protesters in Russia returned to the streets after opposition leader Navalny was handed a near 3-year prison sentence; Turkey reported January CPI; Poland is expected to keep rates steady at 0.1%
- Japan reported final services and composite PMIs; RBA Governor Lowe delivered a dovish message; local rates in China have started to normalize; Thailand kept rates steady at 0.5%, as expected
The dollar bounce has slowed but may not be over. DXY is flat today after three straight up days. For now, it seems to be a battle between growth/vaccine differentials (supporting the dollar) versus risk appetite/diversification (against the dollar). After declining 13% peak to trough, DXY is now up 2% from the lows in early January and needs to break above the 91.428 area to extend its gains. The euro is trading at the lowest level since December 1 near $1.2030 and is testing the key $1.2010 level. A break below would set up a test of the November 23 low near $1.18. Sterling is holding above $1.36, while USD/JPY remains above 105 but is struggling to make further headway towards our target of the November high near 105.70.