GBP Up on Bailey comments, EUR Down on Vaccine Concerns

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Rates as of 0500 GMT

Market Recap

A relatively calm day ahead of todays Federal Open Market Committee FOMC meeting. Stocks in the US were little changed and the VIX index of future volatility hit its lowest level in over a year.

The focus seems to be on the problems with the vaccine rollout in Europe. How else to explain the utter underperformance of EUR despite a betterthanexpected ZEW index expectation 76.7 vs 74.0 expected, 71.2 previous and much, much worsethanexpected US retail sales and industrial production 3.0 mom vs 0.5 expected for sales, 2.2 mom vs 0.3 expected for IP?

The European Medicines Agency EMA said there is no indication that AstraZenecas coronavirus vaccine is the cause of reported blood clots. The EMA is expected to conclude its investigation tomorrow. Nonetheless market participants worried about the implications of a slow vaccine rollout for growth in Europe. The pause amplified concerns in the face of rising virus cases that medical experts in Germany and French PM Casetx unambiguously characterized as third waves of the virus.

Those fears could dissipate soon if, as seems likely, the EMA does declare the vaccine safe. Italian PM Draghi first time Ive written that! and French President Macron said their countries could resume using the OAZ vaccine if the EMA declares it to be safe. The firms shares were up nicely yesterday, suggesting that someone thinks itll get the OK. I look for EUR to bounce back when the vaccine gets the allclear….

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