Themes

• General mood is “risk off”
• U.S. CPI prints largely in line with expectations at +0.8% from +0.7% talk
• Michigan Sentiment at 74.4 from talk of 67.9

What’s Moving

It was all pretty quiet overnight ahead of the U.S. CPI numbers, with the market spooked a little and expecting a higher-than-expected reading. In the end, CPI printed close to expectations, which saw a little Dollar weakness, before short covering brought currencies back to their pre-data levels.

Equities were slightly firmer on the day in good two-way, end of the week trade. 

Over the weekend, comments from U.K. PM Johnson were hawkish on Omicron, calling an “emergency battle” over the new Covid variant. This should weigh on Sterling.

Thoughts

With just two weeks of non-holiday impacted trade on currencies, and after a lack of clear incentives overnight, we are expecting a quiet session in Asia today. All focus will be on the Japanese Tankan report, with expectations being:

• Tankan Manufacturing Index: 19
• Tankan Non-Manufacturing Index: 5

Barring Tankan, Sterling is expected to be under a little pressure today after weekend comments talking up the risks of Omicron from Boris Johnson.

Pivot Points