Euro Wheels Not Yet ‘Greeced’

The euro started the week on the back foot with Grexit talk reignited but US traders didn't take the bait and EUR/USD recovered. On the day, the kiwi and loonie led the way while sterling lagged. Up next it's Chinese CPI.

The ebb and flow of Greek bailout negotiations will be in the spotlight for a few weeks but traders aren't ready to hit the panic button just yet. EUR/USD touched the lowest since Jan 28 at 1.1270 as US traders arrived but the market doesn't yet appear ready for another test of the post-ECB low of 1.1114 and the pair turned around to finish nearly unchanged at 1.1326.

The volatility on the day was a bit lower than we've had so far early in the year. Assisting the euro was a broader USD slide late in the day, in part due to a dip in stocks. Overall, the move was only a small retracement of the post-NFP surge in the dollar.

Headlines were mixed. One that stood out was Plosser saying it will be a challenge to remove 'patient' from the Fed statement. Plosser is a major hawk and after some less-dovish comments from Lockhart on Friday the Fed appeared to be setting up Yellen for a similar move her appearance on Feb 24. The market will continue to look for clues.

In the shorter term, the focus will be on China. At 0130 GMT, data on January inflation is due. The CPI is expected up just 1.0% year-over-year. There is certainly room for stimulus from China but indications continue to be cautious. That may change on a larger fall.

Other data to watch is from Australia with NAB business confidence and Q4 house price data, both at 0030 GMT.

The euro started the week on the back foot with Grexit talk reignited but US traders didn't take the bait and EUR/USD recovered. On the day, the kiwi and loonie led the way while sterling lagged. Up next it's Chinese CPI.

The ebb and flow of Greek bailout negotiations will be in the spotlight for a few weeks but traders aren't ready to hit the panic button just yet. EUR/USD touched the lowest since Jan 28 at 1.1270 as US traders arrived but the market doesn't yet appear ready for another test of the post-ECB low of 1.1114 and the pair turned around to finish nearly unchanged at 1.1326.

The volatility on the day was a bit lower than we've had so far early in the year. Assisting the euro was a broader USD slide late in the day, in part due to a dip in stocks. Overall, the move was only a small retracement of the post-NFP surge in the dollar.

Headlines were mixed. One that stood out was Plosser saying it will be a challenge to remove 'patient' from the Fed statement. Plosser is a major hawk and after some less-dovish comments from Lockhart on Friday the Fed appeared to be setting up Yellen for a similar move her appearance on Feb 24. The market will continue to look for clues. The Premium Trades in USDJPY and both of AUDNZD remain in progress.

In the shorter term, the focus will be on China. At 0130 GMT, data on January inflation is due. The CPI is expected up just 1.0% year-over-year. There is certainly room for stimulus from China but indications continue to be cautious. That may change on a larger fall.

Other data to watch is from Australia with NAB business confidence and Q4 house price data, both at 0030 GMT.