US dollarThe US dollar is on the back foot after a bond auction drew high demand, consequently pushing yields lower. Markets seem content with the Fed’s reluctance to taper its Quantitative Easing scheme.

The House of Representatives is set to impeach President Donald Trump for incitement of an insurrection as early as Wednesday. Vice-President Mike Pence rejected a call to oust Trump using the 25th Amendment.

German officials warned that the current lockdown will probably run beyond the current expiry date of February 1 amid rising infections. Italy’s government is on the verge of collapse after former Prime Minister Matteo Renzi threatened to leave the coalition amid disagreements over budgets.

EUR/USD is holding onto gains above 1.2215 despite these developments. GBP/USD jumped on Tuesday after Bank of England Governor Andrew Bailey downplayed setting negative interest rates by calling them “controversial.” USD/JPY managed to recover a major part of its early lost ground to near one-week lows and was last seen trading with modest losses, around the 103.65-70 region.

Oil prices gained more than 1% on Wednesday, with U.S. crude rising for a seventh day, after industry data showed a bigger than expected drop in inventories and investors shrugged off worsening developments in the pandemic.

Gold traded with a mild positive bias through the early European session and was last seen hovering near the top end of its weekly trading range, around the $1860 region.
US inflation and a speech by the ECB’s Lagarde stand out on Wednesday. Coronavirus and vaccine headlines are eyed.