Morning Market Review

Mar 15, 2021


EUR is trading in both directions against USD during today’s Asian session, consolidating near the level of 1.1950. Friday’s moderate optimism about macroeconomic statistics from the eurozone was balanced by another round of growth in US bond yields, as investors reacted to the start of the USD 1.9 trillion stimulus program. Industrial Production in the eurozone in January increased by 0.8% MoM after a decrease of 0.1% MoM in the previous month. Analysts had expected increase by 0.2% MoM only. On an annualized basis, production increased by 0.1% YoY, which was significantly better than the sharply negative market forecasts of –2.4% YoY. Additional pressure on the instrument is exerted by the recent decision of the European Central Bank to increase the volume of bond repurchases in the next quarter.


GBP is trading relatively stable against USD, testing 1.3950 for a breakout. At the end of last week, GBP demonstrated a steady decline amid growing yields on US Treasury bonds. Weak macroeconomic statistics from Great Britain put additional pressure on the instrument. Industrial Production in the UK in January decreased by 1.5% MoM after an increase of 0.2% MoM in the previous month. Analysts had expected the decrease by 0.6% MoM. In annual terms, the indicator decreased by 4.9% YoY, which turned out to be worse than the market forecasts at the level of –4% YoY. Manufacturing Production fell 2.3% MoM in January, despite forecasts of a decline of only 0.8% MoM. The UK GDP in January fell by 2.9% MoM, which, however, turned out to be noticeably better than forecasts at the level of –4.9% MoM.


NZD is demonstrating an uptrend against USD, quickly regaining Friday’s losses, incurred against the background of higher yields on US Treasuries. The instrument is supported at the beginning of the week by the general positive sentiment in the market. Investors are positive about the prospects for vaccination campaigns, expecting that many countries will soon remove most of the current quarantine restrictions. NZD is supported by strong data from China. The volume of industrial production in the PRC in January rose by 35.1% YoY after increasing by 7.3% YoY in the previous month. Analysts had expected growth by 30% YoY. The volume of retail sales in the same period increased sharply by 33.8% YoY, accelerating from the previous growth by 4.6% YoY. The real dynamics in this case also turned out to be better than the optimistic forecasts at the level of +32% YoY.


USD continues to rally against JPY during today’s morning session, trading near record highs and again trying to consolidate above the psychological level of 109.00. USD is in high demand amid yet another rise in the yield on US Treasury bonds. In addition, low demand for safe assets puts additional pressure on JPY. Macroeconomic statistics from Japan published today does not have a significant impact on the dynamics of the instrument. Machinery Orders in Japan in January decreased by 4.5% MoM after growth by 5.2% MoM in the previous month. Analytical forecasts assumed a decrease in the indicator by 5.5% MoM. On an annualized basis, the indicator slowed sharply from +11.8% YoY to +1.5% YoY, which nevertheless was better than the negative forecasts of analysts at –0.2% YoY.


Gold prices are showing modest gains during today’s session, recovering from ambiguous trading on Friday, when the instrument showed a 1% decline, but then managed to return to the green zone. The most important negative factor for gold was the yield on US bonds, which resumed their growth and returned to the annual highs, updated on March 5. In turn, some support for the instrument was provided by a bill signed at the end of last week on new stimulus package for the American economy in the amount of USD 1.9 trillion. It is expected that such a significant injection of cash into the economy could lead to a noticeable increase in inflationary pressures.