The tone to markets this week is very different to last. We are seeing equities higher once again in Europe, with oil prices also firmed as speculation mounts that there may be some deal in relation to supply cuts between Saudi and Russia. This has allowed Brent to jump above the USD 34pb level. For currencies, naturally those currencies hit hardest by risk aversion are seeing the strongest rebound, such as the Canadian dollar and also the Aussie dollar. The RBA minutes overnight showed the central bank still relatively positive on the domestic economy, with no real sign that they see a need to cut rates further from their current level. That did not hold from the Bank of Korea, with one member voting for lower rates, pushing down the already weak Korean Won.
For today, the initial focus will be on inflation data in the UK, where the headline rate is seen nudging higher to 0.3%, from 0.2% previously. The pricing in UK markets has changed markedly over the past two weeks, with the risk of an easing from the Bank of England now priced into money markets. Weaker than expected data could well weigh on the currency, which itself has been under pressure for most of the month as sterling has been seen less of a safe haven currency in light of the turmoil being seen globally.
Further reading:Get the 5 most predictable currency pairs