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Yellen Supports Risk-On, USD, JPY Weaker

FOREX

As was expected, incoming Treasury Secretary Janet Yellen supported the risk-on sentiment evident in markets from the off. Yellen talked up the requirement to "act big" on COVID-19 stimulus, and also allayed fears of any imminent requirement to raise taxes as the economy recovers. This prompted EUR/USD to bounce back above the 50-dma at 1.2093, hitting the week's best levels in the process at 1.2145.

Scandi currencies are among the best performers, with NOK, SEK outstripping gains seen elsewhere. The single currency also traded well, helping EUR/JPY clock the first positive session in 8.

Focus Wednesday turns to UK, Eurozone and Canadian inflation numbers for December and the Bank of Canada rate decision. The BoC are seen keeping rates unchanged at 0.25%. BoE's Bailey is also scheduled to speak.

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