USD pauses for a breather - ANZ

Analysts at ANZ explained that the USD sell-off paused for a breather. 

Key Quotes:

"It was helped by comments from Japanese FM Aso that sudden moves in currencies are a problem. This was backed up by ECB’s Villeroy saying the recent euro increase is a source of uncertainty and requires monitoring because of its possible downward effects on imported prices. The differing comments from ECB’s Hansson’s yesterday highlights a clear difference of opinion on the governing council, which may become amplified in coming weeks. The ECB press conference on 25^th January will therefore be eagerly awaited. Prior to that, the SPD in Germany is meeting on 21^st January to decide whether or not to progress with coalition talks in Germany. Whilst not a given, it is generally thought that coalition talks will progress. Elsewhere, German and Italian inflation remained subdued, but headlines that the ECB is unlikely to drop its pledge to keep buying bonds until inflation heads to target next week contributed to early weakness in global yields. Other more supportive comments from Villeroy then eased this pressure. European yields finished down 2-4bps, but the US 10-year was up 1bps to 2.56% at time of writing. Equity markets had a positive session too, but commodity prices eased – oil and soft commodities led the decline."