ForexLive European FX news wrap: Dollar mixed, bond selloff continues 0 (0)

Headlines:The bond market rout remains unrelentingChina state refiners reportedly staying away from new Russian oil tradesECB’s Lane: Important not to overreact to inflation surgeECB’s Panetta: Policy action now against inflation risks crashing the economyRBA’s Bullock: Expect some upward revision to our inflation forecastsRBA’s Kent: Some other forces likely to push inflation higher stillUS MBA mortgage applications w.e. 1 April -6.3% vs -6.8% priorEurozone February PPI +1.1% vs +1.3% m/m expectedGermany February factory orders -2.2% vs -0.2% m/m expectedMarkets:EUR leads, CHF lags on the dayEuropean equities lower; S&P 500 futures down 0.9%US 10-year yields up 7.4 bps to 2.627%Gold down 0.1% to $1,921.20WTI up 1.6% to $103.60Bitcoin down 2.1% to $44,910It was a quiet session for the most part but there were some decent moves in the market as we continue to see the bond selloff deepen. Meanwhile, equities tracked lower as stocks remain on the defensive after more hawkish Fed talk from Brainard yesterday.European indices are down by nearly 2% across the board with US futures also sinking further by roughly 1%.The moves didn’t quite translate into any meaningful action in FX though. Major currencies remain in a rather push and pull mood with the dollar seeing a slight advance early on only to give that all back to be little changed now.EUR/USD fell from 1.0890 to 1.0875 before clawing its way back up to 1.0910 levels currently. GBP/USD also slid to 1.3045 only to climb to 1.3100 and then fall back to 1.3070 at the moment.The yen remains an interest point amid the bond market rout but USD/JPY is seen hugging 123.70-90 levels for the most part during the session.The FOMC meeting minutes later in the day will be a key risk event to watch out for as what is happening in the bond market continues to be where all the action is at – highlighting the battle between central banks and inflation.

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ECB’s Lane: Important not to overreact to inflation surge 0 (0)

Can’t respond to current high inflationECB orientation is geared towards the medium-termAgain, this does not sound like someone who is advocating for tighter policy sooner rather than later. Is it that surprising? Not in the slightest. The central bank continues to toy with market hopes but it is increasingly evident that they don’t really have the stomach for tighter policy when push comes to shove.In turn, this could be a headwind for the euro in the months ahead as the Fed begins to flex its muscles.

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