Bond demand brings dollar down, inflation data and coronavirus in focus

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This is what you need to know to trade today Wednesday 13 January:

The US dollar is on the defensive after a bond auction drew high demand, causing yields to slide. Markets seem content with the Fed’s reluctance to cut back on its quantitative easing scheme. US inflation and a speech by Lagarde from the ECB stand out on Wednesday. Coronavirus and vaccine headlines are in the spotlight.

The 10-year US Treasury yields They are around 1.12%, falling from yesterday’s high of 1.18%. The slide, which drove the dollar lower, came after investors showed strong demand for new 10-year bonds at Tuesday’s auction. A 30-year bond offering is expected on Wednesday as the dollar remains yield-sensitive.

American politics: The House of Representatives is ready to impeach President Donald Trump of inciting an insurrection starting Wednesday. Vice President Mike Pence rejected a call to overthrow Trump using the 25th Amendment. President-elect Joe Biden will take office in a week and investors are focused on his economic plans rather than the political drama that is making headlines.

It is anticipated that figures from the US Consumer Price Index. show a rebound in inflation in December, which will also influence the Federal Reserve’s calculations.

Richard Clarida and Lael Brainard, members of the Federal Reserve, are scheduled to speak at the end of the day, and any comments on the bond-buying plan will be watched closely. Both are permanent voters on the Fed’s board of directors.

German officials warned that the current confinement will likely extend beyond from the current expiration date of February 1 amid the surge in infections. Italy’s government is on the brink of collapse after former prime minister Matteo Renzi threatened to leave the coalition amid disagreements over budgets.

He EUR/USD maintains earnings above 1.2215 despite these developments. Christine Lagarde, President of the European Central Bank, speaks later in the day.

Brexi: The EU and the UK are ready to return to the negotiating table to discuss issues that have not been touched on in the trade agreement, the most important ones related to financial services.

Britain’s increased vaccination campaign is paying off, with around 4% of the population receiving at least one vaccine. UK hospitals are under increasing pressure, including increased use of ventilators.

The pair GBP/USD it rose Tuesday after Bank of England Governor Andrew Bailey downplayed negative interest rates as “controversial.”

The US vaccinated less than 3% of its population against COVID-19, while the rates in European countries are around 1%. An initial study in Israel, a world leader with 22.2%, showed that immunization of Pfizer / BioNTech reduces contagion, not just the disease.

Bitcoin has resumed its decline, trading at around $ 34,000 and not recovering the highs. Ethereum and XRP are also below their recent highs.

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