Fundamental Analysis Morning Market Review 07 April 2021

Apr 07, 2021

Morning Market Review:


 EUR demonstrates the flat dynamics of trading against USD during today’s Asian session, consolidating near local highs since March 23, updated due to the active growth of EUR the day before. Despite the fact that European markets were closed on Monday due to Easter holidays, the instrument started the current trading week very confidently. The reason for this was the correction of USD, which ignored the upbeat statistics from the US on Friday and Monday, but reacted to the reduction of long positions by the leading hedge funds, as well as to the correction in the yield of US Treasury bonds. Macroeconomic statistics from Europe published yesterday turned out to be mixed. Sentix Investor Confidence index in April showed a steady increase from 5 to 13.1 points, with the forecast of growth only up to 7.5 points. The Unemployment Rate in the euro area remained unchanged at 8.3%, while analysts had expected it to decline to 8.1%.


 GBP is trading with multidirectional dynamics during today’s morning session, consolidating near 1.3820 after an active decline the day before, which did not allow the instrument to consolidate at new local highs since March 19. USD is gradually recovering in the market after an uncertain beginning of April, although it should be noted that the growth is extremely uneven. USD is supported by restrained optimism about the prospects for the US economic recovery amid stimulus programs and an active vaccination campaign. In the UK, the pace of the vaccination campaign is also high, and investors expect a partial opening of the economy in April.


 AUD is showing negative dynamics today, despite the fact that at the opening of the daytime session the instrument managed to renew its local highs since March 23. The instrument is moderately supported by fairly positive macroeconomic statistics from Australia. AiG Performance of Construction Index in Australia in March showed a sharp rise from 57.4 to 61.8 points, which was better than the market average expectations. In turn, Commonwealth Bank Services PMI for the same period increased from 53.4 to 55.5 points, which did not reach the forecasts of 56.2 points. Commonwealth Bank Composite PMI also rose from 53.7 to 55.5 points in March. Today, investors will be focused on the publication of the US Fed’s meeting minutes, as well as the February statistics on the US trade balance. Traders will also pay attention to the speech of the representative of the US Federal Reserve, Charles Evans.


 USD is showing flat dynamics against JPY, consolidating near 109.75 after an active decline in the instrument the day before. The macroeconomic statistics from the US published yesterday did not provide any noticeable support to USD. At the same time, the IBD/TIPP Economic optimism index in the USA in April rose from 55.4 to 56.4 points, and the Redbook index of retail sales for the week ending April 2 added 10.6% YoY, accelerating from the previous growth by 9.8% YoY. Yesterday’s statistics from Japan, in turn, disappointed with a sharp fall in Overall Household Spending in February by 6.6% YoY, while analysts had expected their decline by only 2.1% YoY.


 Gold prices are showing a slight decline during today’s trading in Asia, retreating from local highs since March 25, updated the day before. The quotes are still supported by volatile positions in USD, which started trading in April with uncertainty, despite the publication of strong data on the labor market and business sentiment. A noticeable pressure on USD is exerted by the fact of a decrease in the yield of Treasury bonds, which retreated from their record highs. At the same time, the demand for risky assets remains quite high as positive macroeconomic statistics from the United States and China arrive, which strengthen confidence in the early recovery of the world economy after the pandemic. Investors are awaiting the publication of the US Fed’s meeting minutes today, but it is very unlikely that it will change its policy. The American regulator ignores the risks of inflation, which are growing against the background of a sharp increase in budget spending, and continues to adhere to a policy of low interest rates, which, according to forecasts of the Fed, will remain at current minimum levels for a long time to come.