FX Files – Sticky Expectations Validates ECB’s Hawkish Lean

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Global equities and yields are slightly lower to start the day amid continued concern over tech valuations. Oil continues to selloff amid a continued pick up in Strait traffic. Within G10 FX, the USD is mixed to slightly lower as US yields outperform. EUR and EUR betas are outperformers amid sticky medium term EUR inflation expectations. NOK is the underperformer given the drop in crude. We see some risks of a small USD rally into the end of the day, as it is corporate month end, and given that Kashkari could come out mildly hawkish, as we see a decent chance that he penciled in a hike.

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