GBP

The pound remains under pressure as the British Government works to ease tensions with the EU over their threat to ban AstraZeneca vaccine exports. This is on top of poor employment data for February which showed a further 86,000 Brits had entered unemployment. Today also saw the release of February’s UK Consumer Price Inflation data, which slumped to 0.4%, down from 0.7% in January and and missing its average forecast of 0.8%.

EUR

Despite fresh lockdown fears over a third wave in mainland Europe, the currency has actually strengthened at the start of this week. A third lockdown would still severely limit the eurozone’s ability for a swift economic recovery later this year and European Central Bank (ECB) president Christine Lagarde again warned about the bloc’s slow rollout of the vaccine, adding that the ECB remains ready to adjust all of their instruments, as appropriate, to keep inflation moving towards their target. 

USD

The dollar got close to a four month high this morning due to concerns over Europe’s feared third wave and potential tax hikes in the US. A US health agency also released a report suggesting the AstraZeneca vaccine data may be outdated, increasing worries over the pace of the European recovery.

Risk appetite dropped fairly significantly overnight as Secretary of the Treasury Janet Yellen and Chair of the Federal Reserve Jerome Powell both testified to congress that future tax hikes will be necessary to pay for current infrastructure projects and other public investments. Powell once again reiterated that a spike in inflation is expected in the near term future for the US. This news helped curb treasury yields, putting them below their one year high seen last week.

Key announcements

07:00 UK Consumer Price Inflation
Expected to rise to 0.8% from a previous reading of 0.7%

08:30 German Manufacturing Purchase Managers’ Index (PMI)
 Expected to rise to 60.8 from a previous reading of 60.7

09:00 EU Market PMI composite
Expected to rise to 49.1 from a previous reading of 48.8

09:30 UK Services PMI
Expected to rise to 51 from a previous reading of 49.5

12:30 US Durable goods orders
Expected to drop to 0.8% from a previous reading of 3.4%

12:30 US Non defence capital goods orders
Expected to remain at 0.5%

14:00 Fed Chair Powell testifies 

15:40 ECB President Lagarde speaks