Themes

· General mood is “risk off”

· Higher than expected German CPI supports strong gains on the Euro

· USD weaker across most of the majors overnight

What’s Moving

The Euro traded firmer overnight, supported by a much higher than expected German CPI data reading (+7.3% from talk of +6.3%). The gains in the Euro filtered through to Sterling, which then dragged the Dollar weaker against most of the majors.

U.S. equities were slightly weaker on the day, while oil rallied on a larger than expected draw on U.S. Crude Oil Inventories.

USD/JPY managed to hit fresh weekly lows on knock on selling after weakness in Asia.

Thoughts

We are expecting a consolidatory session in Asia today, with the expectation being for some bargain hunting of Dollars after the recent weakness. There is some key data today, which may also impact trade.

Asian session data today includes:

· Japanese Preliminary Industrial Production (E: +0.5%)

· Australian Building Approvals (E: 4.8%)

· Chinese Manufacturing PMI (E: 49.7)

· Chinese Non-Manufacturing PMI (E: 50.3)