Risk Aversion Seen at the Start of Busy Week

European bonds fell on signs inflation was quickening in Germany and equities retreated. The dollar weakened earlier as Donald Trump’s order halting some immigration reverberated around the world.

Government debt in the periphery was hardest hit, with yields in Italy and Portugal rising after consumer prices soared in Saxony as markets prepare for a busy week of central bank meetings. Stocks in Europe, Japan and Australia dropped with U.S. futures. The dollar pared an earlier decline and gold erased gains after Trump’s limits on immigration from seven predominantly Muslim nations sparked a knee-jerk risk-off reaction in Asia hours. The rand led declines in emerging markets currencies.

Faster-than-expected price growth prompted a sell-off in bonds on bets inflation of more than 2 percent in some parts of Germany will give the European Central Bank leeway to brake monetary stimulus sooner. Meanwhile, Trump’s immigration ban gave cause for concern that he may follow through with isolationist policies touted on the campaign trail.

Bloomberg

EUR/USD – Euro Steady at 1.07, Markets Brave for Soft German CPI

Dollar Stumbles After Soft GDP and Trump Negotiation Skills

UK Private Sector Growth Softens in Last Three Months

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Craig Erlam

Craig Erlam

Senior Currency Analyst at OANDA
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the Wall Street Journal and The Telegraph, and he also appears regularly as a guest commentator on networks including Sky News, Bloomberg, CNBC and BBC. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.