Fundamental Analysis Morning Market Review 01 March 2021

Mar 01, 2021


 EUR is showing slight gains against USD during today’s Asian session, consolidating after a steady decline at the end of last week, when USD again went on the offensive amid recovery in US bond yields. USD was also supported by good macroeconomic data from the USA at the end of the week. In January, Personal Spending in the US increased by 2.4% MoM after falling by 0.4% MoM in the previous month. Personal Income accelerated from +0.6% MoM to +10% MoM, which also outpaced market forecasts of +9.5% MoM. Today, European investors focus on statistics on business activity and levels of consumer inflation for February in Germany. In addition, during the day, ECB President Christine Lagarde is expected to speak and possibly comment on the rapid growth in Treasury yields and inflationary risks.


 GBP is correcting against USD in the trading session this morning, recovering from a confident decline at the end of the previous trading week. The weakening of GBP was facilitated by a large-scale correction in the bond market, which provoked a decrease in demand for risky assets. GBP was also under pressure from the comments of the Bank of England officials. Last Friday, the chief economist of the regulator Andy Haldane made a speech in which he pointed to the risks of inflation, noting that it will be extremely difficult to contain it as the global economy recovers from the effects of the pandemic. Meanwhile, investors continue to praise the effectiveness of the UK coronavirus vaccination campaign, expecting the latest travel restrictions to be fully lifted by summer or fall 2021. Today, traders are awaiting the release of February UK Manufacturing PMI from Markit. Also, data on the dynamics of consumer credit will be released in January.


 NZD posted moderate gains against USD during today’s morning session, correcting after a sharp decline last week that pushed the instrument back from its all-time highs since August 2017. Investors reacted intensely to the sharp drop in Treasury yields, which forced them to revise their portfolios with a clear bias towards “safe” assets. Macroeconomic statistics from New Zealand published last Friday turned out to be rather weak and also contributed to the development of the “bearish” trend for the instrument. The ANZ Consumer Confidence Index in February fell from 113.8 to 113.1 points, and the trade balance in January showed a deficit of 626 million dollars. At the beginning of the week, the instrument remains under pressure from weak data from China. The Caixin Manufacturing PMI in February fell from 51.5 to 50.9 points with a neutral outlook. The previously published Non-Manufacturing PMI for the same period fell from 52.4 to 51.4 points.


 USD is flat against JPY in Asian trading today, consolidating near its record highs since August 2020. USD received a powerful impetus to growth at the end of the last trading week, as investors were actively selling risky assets amid correction in the bond market. The instrument was additionally supported by good macroeconomic statistics from the USA, which was quite close to its forecasts. Today, JPY is in demand after the publication of data from Japan. Jibun Bank Manufacturing PMI in February rose from 50.6 to 51.4 points, which turned out to be better than market forecasts. Tomorrow, Japanese investors are expecting the release of the January data on the labor market, in particular, the unemployment rate.


 Gold prices are actively recovering during today’s Asian session, retreating from record lows since June 2020, updated at the end of last week. Last Friday, gold quotes fell by almost 3%, responding to an equally active growth in the yield of US bonds, which renewed their annual highs. In turn, the further strengthening of the asset is still hampered by expectations of new stimulus measures in the US. Last week, the US House of Representatives approved Joe Biden’s USD 1.9 trillion plan. Now the bill will go to the Senate, where Biden’s initiatives have already been criticized. One way or another, the US President and his administration insist on the final approval of the package by March 14.