Fed's Mixed Message Sees DXY Strike an 8-Week High

The greenback rallied well for a second session, rising against most others in G10 as risk appetite remains weak and markets tried to pick apart mixed Fed messages. Fed's Evans appeared to muddy the waters somewhat after stating that the bank's forward guidance allows rates to rise before average inflation rises to 2% - which seemed to run against Powell's Q&A last week.

BoE's Bailey also spoke against market expectations that the Bank could be considering negative rates after stating that the technical review into negative interest rate policy would take time. The governor added that it is not an indication that the Bank will move rates into negative territory. This prompted a small turnaround in GBP, but this faded into the close as markets grew concerned over fresh COVID restrictions installed across the UK.

Global preliminary manufacturing and services PMI data take focus Wednesday, with the data expected to show a further divergence in economic fortunes between the likes of Germany and the UK against the rest of the Eurozone.

Again, the speaker slate will be of interest with comments due from ECB's de Cos and no fewer than 8 Fed members, including Fed chair Powell.