Fundamental Analysis Morning Market Review 12 March 2021

Mar 12, 2021


EUR is falling against USD during today’s Asian session, retreating from local highs of March 4, updated the day before. The reason for the emergence of corrective dynamics was the results of the meeting of the European Central Bank (ECB) on Thursday. As expected, the European regulator did not change interest and deposit rates; however, it clearly signaled that it will increase the total volume of bond purchases from next month in order to correct the yield curve, which has recently served as a significant source of speculation in the market. Today, investors are focused on statistics on consumer inflation from Germany for February, as well as January data on the dynamics of industrial production in the eurozone.


 GBP is slightly declining against USD during today’s morning session, having managed to update local highs since March 4 and touch the level of 1.4000. The pair is under pressure from strong statistics on the dynamics of jobless claims, published in the US the day before. For the week ending March 5, the number of initial jobless claims decreased from 754K to 712K, which turned out to be better than the expected 725K. Continuing jobless claims fell from 4.337M to 4.144M, also beating forecasts of 4.22M. Investors are reluctant to open new positions on the instrument, preferring to wait for the release of macroeconomic data from the UK on industrial production and GDP dynamics for January.


 AUD is showing a weak downward correction against USD in today’s Asian session, retreating from local highs since March 4. The instrument’s positions are under pressure from technical factors, as well as rather strong macroeconomic statistics from the US on the dynamics of jobless claims. In addition, investors are reacting to Joe Biden’s long-awaited signing of the $ 1.9 trillion stimulus bill. In the course of the discussion, the stimulus package has undergone a number of changes. In particular, the increase in the minimum wage to $ 15 per hour at the federal level was removed from it. Today, investors are focused on statistics from the United States on the dynamics of Producer Price Index and the Michigan Consumer Sentiment Index.


 USD resumed strong gains against JPY during today’s Asian session, quickly recovering to previous record highs. The instrument adds about 0.27% and is testing the level of 108.75 for a breakout. Significant support for USD is provided by strong macroeconomic data from the US, which signals a further recovery in the US economy. In addition, the market received a very optimistic signal from Joe Biden’s administration, which was able to quickly pass a stimulus package bill in a record amount of $ 1.9 trillion. In turn, the macroeconomic statistics from Japan again turned out worse than their forecasts. In particular, BSI Large Manufacturing Conditions Index in Japan in Q1 2021 fell sharply from 21.6 to 1.6 points, while market forecasts assumed its growth to 25.9 points.


Gold prices  are slightly declining during today’s morning trading session, building on the
correctional momentum that formed the day before. The pressure on the position of gold is again exerted by the growing yields of US bonds, which reacted to the optimistic statistics on the dynamics of jobless claims. In turn, a more confident decline in the instrument is hampered by the long-awaited signing by Joe Biden of the stimulus package bill in the amount of $ 1.9 trillion. It is expected that such a large cash injection into the economy will contribute to a sharp increase in inflationary risks, while gold is one of the main instruments for hedging inflation. However, while the statistics on inflation in the US does not cause significant concerns, the prospects for the growth of USD remain.