Fundamental Analysis - Morning Market Review 08 March 2021
EUR has been declining against USD during today’s Asian session, developing a strong “bearish” impetus that has captured the instrument since March 3 and has led to renewed local lows since November 26, 2020. The pressure on EUR at the beginning of the week was exerted by strong data from the US on employment, published last Friday. Nonfarm Payrolls in February increased by 379K after the growth by 166K in the previous month. Analysts expected growth of 182K. Another factor behind the growth of USD is the increased yield of US Treasury bonds, as well as the rather sluggish reaction of the US Federal Reserve to such an active dynamics in the bond market. The focus of European traders today is on statistics from Germany on the dynamics of industrial production in January.
GBP strengthened slightly against USD on Monday, trying to return to corrective growth after a decline at the end of last week and renewed local lows since February 12. GBP is depreciating against the background of a large-scale growth of USD across the entire spectrum of the market; however, the rather optimistic epidemiological situation in the country allows the instrument to demonstrate active corrective attacks. The markets expect the lifting of most of the quarantine restrictions in the UK by the end of March, which should have a beneficial effect on the rate of recovery of the British economy. Today, investors are awaiting a speech by the Governor of the Bank of England Andrew Bailey, who is likely to comment on the recent strengthening of GBP and touch on the pressing issue of adjusting the bond yield curve.
AUD shows ambiguous dynamics of trading against USD during today’s Asian session, consolidating at 0.7700. The instrument is again under pressure after last Friday’s publication of strong data on US employment, which turned out to be significantly better than market expectations. In addition, investors were enthusiastic about the success of the US Senate vote on new measures to support the US economy. President Joe Biden’s bill was approved in the Senate by a margin of only one vote, but before that senators had made many amendments to the law. Now the American Rescue Plan has to return to the House of Representatives of the US Congress, after which it will be able to get signed by Joe Biden. Some support for AUD at the beginning of the new week is provided by good macroeconomic indicators from China. In particular, exports from China in February grew by a record 60.6% YoY, which was more than 1.5 times better than expectations.
USD continues to trade against JPY with an uptrend; however, the instrument’s activity remains rather low at the beginning of the week, as investors expect new drivers to appear on the market. The strong macroeconomic statistics from the US released last Friday supported the USD “bulls”, which are already showing record results. Today, the focus of Japanese investors is on macroeconomic statistics from Japan, which precede the publication of updated data on Japan’s GDP dynamics for Q4 2020, scheduled for Tuesday. The volume of bank lending in February increased by 6.2% YoY after increasing by 6.1% YoY in the previous month. In turn, the Current Account (not seasonally adjusted) in January fell from JPY 1165.6B to JPY 646.8B, which turned out to be significantly worse than the optimistic forecasts of growth to JPY 1229.6B.
Gold prices are consolidating near their nine-month lows at the beginning of the week, maintaining the “bearish” impetus, which can be traced in the dynamics of the instrument since February 23. The growing yields on US bonds, as well as the reluctance of the US Fed to interfere in this process, exert significant pressure on gold’s positions. According to the Chair of the American regulator Jerome Powell, the current surge in bond market yields is associated with the natural process of economic recovery and is to a lesser extent caused by any speculation. Additional pressure on gold at the end of last week was exerted by a strong February labor market report. Nonfarm Payrolls in February increased by 379K after increasing by 166K in the previous period. At the same time, the unemployment rate fell from 6.3% to 6.2%, which also turned out to be better than the neutral forecasts of analysts.