The FX market is turning more efficient again, rewarding both more robust European Union (EU) data and improved UK circumstances.

While the FX markets are still very complicated with positive Covid-19 and reopening headlines competing with the implications of rising bond yields for various assets, some efficiencies are coming back to the scrim.

Sterling continues to leverage on a faster UK Covid-19rebound as markets continue to reward Sterling against the backdrop of improved UK circumstances.

EURUSD has retracted from initial weakness in Asia aided by a well-ahead of the reopening curve and forecasted data points on the back of vastly improved conditions around the IFO survey for February.

The AUD and NZD continued their push higher overnight, buoyed by the reflation theme and rising commodity prices. The currencies have also been the beneficiary of rising domestic bond yields.

And in the case of the AUD, despite uber dovish Reserve Bank of Australia (RBA) forward guidance, traders continue to price a higher probability of an RBA rate hike given the rapidly improving domestic state of affairs.

Global yields and curves resume higher. The dollar is lower except for USDAsia as local currencies near the tipping point. US rates traders continue to reprice the FED curve and perhaps intimidating Asian central banks into a policy corner.

Positive outlook and competitive yield differential, USDCNH is trading relatively firm again this morning. The PBoC still trying to raise the QDII quota for institutions and studying the possibilities for individuals to buy foreign securities.

The Malaysian ringgit is currently in a tug of war between narrowing yield differentials with US bonds and surging oil prices. While Malaysia is losing some of its MGS appeals, the ringgit stands a great chance to benefit from export and commodity recovery as the world continues to reopen for business.

Gold gains some lustre

It was a strange world seeing the commodity locomotive racing at full steam, but gold left-back at the station. But correlations are looking more normal today after yesterday morning signal gold was trading slightly higher in delayed response to USD weakness. A weaker US dollar remains one of the primary lift-off balloons.

Gold built on Friday’s modest rally, clearing and holding above the USD1,800/oz level. USD weakness was likely the key factor behind gold’s recovery.

Democrats may vote on the US$1.9 trillion stimulus package by the end of this week, with a Senate vote next week which should hold gold’s appeal as inflation concerns and reflation appeal suggest gold is a good hedge.