Fundamental Analysis Morning Market Review 02 April 2021

Apr 02, 2021

Morning Market Review:


EUR is showing flat dynamics against USD during today’s Asian session, consolidating near the local highs since March 29, which were renewed against the background of strong growth in EUR yesterday. The instrument was supported by positive data on business activity, which is recovering in the region, despite the difficult epidemiological situation and new restrictions, which are being introduced, for example, in Germany and France. At the same time, the Markit manufacturing PMI in the eurozone rose in March by only 0.1 points to 62.5 points, which can hardly be called a strong result. Similar statistics for the United States turned out to be noticeably better, but American investors preferred to concentrate on the speech of President Joe Biden, who announced his intention to increase the tax burden in order to implement plans to modernize infrastructure in the country.


GBP is marginally strengthening against USD in today’s morning session, ending the week at new local highs since March 23. Market activity remains rather low due to the Easter holidays. Investors’ interest is fueled only by the forthcoming publication of data on the US labor market for March. After an impressive report on private sector employment from ADP, investor optimism increased markedly, although the overall picture was smoothed by statistics on jobless claims. The number of initial jobless claims for the week ending March 26 increased from 658K to 719K, which turned out to be worse than the market forecasts of growth to 680K. The number of continuing jobless claims for the week ending March 19 decreased from 3.84M to 3.794M, while forecasts assumed a decrease in the indicator to 3.775M. GBP positions on Thursday were supported by positive macroeconomic statistics on business activity in the UK manufacturing sector. Markit Manufacturing PMI rose from 57.9 to 58.9 points in March, which turned out to be better than the neutral forecasts of analysts.


NZD is developing a “bullish” trend against USD in today’s trading in Asia, updating local highs since March 23. The uptrend was triggered by technical factors, as well as the correction in the yield of US bonds, which reacted to the speech of US President Joe Biden. Biden outlined the main essence of his program to modernize the country’s infrastructure, which will cost American taxpayers more than USD 2 trillion. At the same time, the presidential administration is considering the possibility of increasing taxes, which will definitely meet with resistance in the Republican camp. Yesterday’s macroeconomic statistics from the USA provided moderate support to USD. The ISM manufacturing PMI rose from 60.8 to 64.7 points in March, well ahead of its growth forecasts to 61.3 points. The ISM Manufacturing Employment Index for the same period rose from 54.4 to 59.6 points, while analysts expected it to decline to 53 points.


USD has shown a slight corrective decline against JPY during today’s Asian session, retreating from record highs renewed on March 31. Investor activity dropped noticeably at the end of the week, due to the Easter holidays, but a significant part of traders expect the US labor market report to be published on Friday, which is likely to provide tangible support to USD. At the same time, traders continue to analyze the speech of President Joe Biden, who announced a major reform of the US infrastructure. The modernization is expected to cost the American economy about USD 2.25 trillion, and to keep the budget deficit from growing, the Biden administration is considering increasing the corporate income tax and tax rate that applies to foreign income.


Gold prices are rising markedly during today’s morning trading session, updating local highs since March 29. The asset is developing a strong “bullish” momentum, which was formed the day before as a reaction to the decline in US bond yields. Buying activity for the instrument was also strengthened by growing fears of rising inflation in the United States, after President Joe Biden introduced a new program of large-scale investments in US infrastructure. Today, investors are focused on the publication of the March report on the US labor market. Analysts’ forecasts are very optimistic and, if they come true, it will support USD.