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Commodity Currencies up on Stronger Commodities

Note  The table above is updated before publication with the latest consensus forecasts. However, the text charts are prepared ahead of time. Therefore there can be discrepancies between the forecasts given in the table above and in the text charts. 

Rates as of 0500 GMT

Market Recap

It was a big day yesterday in the EU. EU leaders meeting in Brussels resolved their dispute with Poland and Hungary over the rule of law mechanism. The settlement, the details of which I wont bore you with, mean the EU can go ahead with its 1.8tn budget and 750bn postpandemic recovery fund. Thats positive for the euro.

The European Central Bank ECB meeting also turned out to be positive for the currency. They unveiled a slew of measures, but significantly they were all recalibrations of existing measures, as the Governing Council had said back in October  the existing programs were extended and more money was made available for them. There were no new programs put into place. Keeping the current programs in place longer for longer means more support for the economy and therefore an earlier recovery, but it doesnt necessarily mean more downward pressure on the euro now. Furthermore, ECB President Lagarde noted that the additional funds need not be used in full, meaning that there was possibly less than meets the eye here. EU  sovereign bond yields rose after the announcement, signaling the markets disappointment. 

While ECB President Lagarde repeated the Banks boilerplate comments on…

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