Today's news headlines: 

‘Yellen says rates may have to rise to prevent “overheating”’. As the US economy begins to post strong economic data, former Federal Reserve Chair Janet Yellen has spoken about the possible need for higher interest rates. The potential for the economy to overheat and push inflation past a sustainable level has been hotly debated. Recent rumblings of a new piece of stimulus from the Biden administration has amplified these talks somewhat. $4bn of infrastructure spending over the next decade has sparked near term concern over inflation. Yellen has since clarified her comments, closely aligning herself with the Fed, insisting these inflation periods will be merely transitory despite talk of fresh spending. (Financial Times)

‘UK boosts laboratory capacity to tackle Covid-19 variants’. The UK has now administered 50 million doses of the coronavirus vaccine. The emergence of new variants are however a cause for concern, with questions over whether or not the existing vaccines in circulation will be enough to ward off these different strains and keep hospitalisations low. A recent £30 million investment into dedicated Covid-19 variant labs will aim to monitor and keep the risk of a serious outbreak low while determining the usability of the current vaccines for protection. Keeping this threat low will be crucial in the coming months as the UK transitions out of lockdown. (Financial Times)

Today's events, rates, and data 

• Treasury Secretary Janet Yellen sent markets lower yesterday with her comments surrounding inflation, with the S&P 500 down 0.67% and the Nasdaq down 1.88% on the day. It was a similar story in the UK, with the FTSE 100 falling 0.67%. Elsewhere, Cable continues to trade range bound, while GBP/EUR has gained 0.28% in early trading.

Today's events

France final Services PMI: 8:50am
Germany final Services PMI: 8:55am
US ADP Non-Farm Employment Change: 1:15pm
FOMC Member Charles Evans Speaks: 2:30pm and 8:00pm
US ISM Services PMI: 3:00pm

Interbank rates

GBP/USD: 1.3889
GBP/EUR: 1.1573
EUR/USD: 1.2001
USD/CAD: 1.2300

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