RBC Capital Markets

Markets have a very mild risk‐off tone overnight, with commodity currencies following equity futures lower (AUD/USD ‐20pts), but moves have been very small and USD is mixed more broadly. USD/CAD has held above 1.20 (spot 1.2075). Fed Vice Chair Quarles said the US economy was in the “last stretch of the return to normal” though some sectors remain vulnerable. There has otherwise been little news to give markets any direction. Day ahead: Data‐flow picks up today.

The UK and Canada will both see a sharp acceleration in in April CPI inflation (see GBP and CAD) and in Australia, we have key April employment data (AUD). In the US, the minutes of the April FOMC meeting are likely to echo the cautious tone that Powell struck in the press conference, including references to the rise in inflation being “transitory” and “substantial further progress” being required in meeting the Fed’s goals.

Citi

There are a number of developments bubbling away, which at the margin, may be stalling risk sentiment. US equities eroded into the close yesterday, and we have seen global equity benchmarks take their cue. Holidays in HKD and KRW led to a muted market overnight. Oil prices have corrected off the highs, over some nervousness over a potential Iran related announcement, although expectations have since been tempered.

Nevertheless, FX continues to fare better, with traditional correlations to risk assets holding less grip. Note that EURUSD achieved a bullish daily close yesterday above the pivotal resistance range, with not much in terms of topside levels until 1.2350 according to CitiFX Technicals. GBP will not react to its CPI print, but inflation could offer more interesting clues for ZAR and CAD today. Otherwise it should be a quiet morning session for Europe, with Fedspeak and FOMC minutes later in the day.

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