EUR extends recovery as Germany look to.......>

FOREX: EUR extends recovery as Germany look to bend fiscal rules

-The single currency firmed on reports that Germany are considering the creation

of a 'shadow budget' to increase public investments beyond national debt

restrictions (as per Reuters sources). The headlines saw EUR/USD recover back

through Friday's highs, making $1.1085 the first target. The sustainability of

any rally ahead of Thursday's ECB meeting remains to be seen, with volumes and

liquidity looking poor ahead of Draghi's penultimate presser.

-Sterling was, again, the strongest performer across G10 as legislation was

secured barring the government from seeking a No Deal Brexit (although this

remains technically feasible via other avenues). Somewhat hawkish tones from

BoE's Vlieghe also helped support the currency, stating that the Bank are

unlikely to be able to cut rates as it did in the previous downturn and that the

Bank's analysis rules out negative rates. GBP/USD managed to eke out a new

multi-week high at $1.2385.

-Chinese inflation data, French and Italian industrial production and UK jobs

data are Tuesday's data highlights. ECB's de Cos is also due to speak.