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Slips Amid Risk Aversion


EUR/JPY has corrected last weeks rally and last trades -18 pips at Y126.96 amid broader risk aversion, inspired by familiar concerns over Covid-19/vaccination matters, weaker than expected off'l Chinese PMIs released over the weekend and angst surrounding retail trade dynamics.

  • European Commission Pres von der Leyen announced that AstraZeneca agreed to deliver 9mn of additional Covid-19 vaccine doses to the EU in Q1. This raises the supply target to 40mn, just half of what the bloc had expected to get from AstraZeneca before the company backpedalled on its initial commitment.
  • The vaccine affair triggered a spat between the EU and UK after Brussels imposed restrictions on exports of Covid-19 vaccines and threatened to invoke a clause of the Northern Ireland Protocol, which would enact a trade borter with Ireland. The EU made a U-turn on the latter decision and UK Trade Sec Truss noted that London received reassurances from Brussels that vaccine exports into the UK will not be disrupted.
  • In Italy, familiar political saga continues, with BBG sources suggesting that ex-PM Renzi "is pushing for FinMin Roberto Gualtieri to be replaced as part of an attempt to forge a new coalition gov't led by PM Giuseppe Conte," where Renzi's party would have greater influence on Italy's finances. RTRS cited a source in Renzi's Party noting that the ex-PM would like to see ex-ECB Pres Draghi at the helm of the gov't
  • Meanwhile, Italian Pres Mattarella has looked past the opposition's calls for a snap election and asked lower house speaker Fico to mediate between former coalition partners. Fico noted that the next round of negotiations will kick off Monday, before he reports back to the President on Tuesday.
  • A break below Y125.60, which limited losses on Jam 27, would allow bears to take aim at Jan 18 low of Y125.09. On the topside, focus falls on Jan 29 high of Y127.34, followed by Jan 7/Mar 1, 2019 highs of Y127.49/50.
  • Focus in the eurozone moves to a slew of M'fing PMIs from across the region, German retail sales & EZ unemployment. The ECB speaker slate is empty today.

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