Morning Market Review 17 March 2021
EUR is showing flat dynamics against USD during today’s Asian session, expecting the emergence of new drivers in the market, which may be new macroeconomic data from the eurozone, as well as the results of the US Federal Reserve meeting, which began on Tuesday. The statistics from ZEW released yesterday in Europe set a good tone for future publications; however investors still prefer short positions on EUR. One way or another, the economic sentiment index in the eurozone in March rose from 69.6 to 74 points, which significantly exceeded the negative forecasts of a decline to 65.1 points. The index of current situation in Germany for the same period rose from –67.2 to –61 points against the forecast of –62 points. The index of economic sentiment in Germany in March rose from 71.2 to 76.6 points, while the market expected a more modest growth to only 74 points. Today, European investors are focused on statistics from the eurozone on the dynamics of consumer prices in February.
GBP is trading near zero against USD during today’s Asian session, hovering around 1.3900. Investors are in no hurry to open new positions ahead of the publication of the Fed’s two-day meeting minutes, awaiting comments from representatives of the regulator in connection with the disappointing statistics on the dynamics of retail sales in the US in February. Data released on Tuesday reflected a sharp 3% MoM decline in February sales after rising 7.6% MoM (revised from +5.3% MoM) in the previous month. Forecasts assumed the appearance of negative dynamics at the level of –0.5% MoM. British investors are focused on the meeting of the Bank of England on monetary policy, the results of which will be announced tomorrow. The market does not expect any changes; however, adjustments to the quantitative easing program are quite possible, given the high impact of Treasury bond yields on the value of GBP.
NZD has shown a slight decline against USD during today’s morning trading session, once again trying to consolidate below 0.7200. Market participants are awaiting the publication of the final minutes of the US Fed meeting, but for now they are discussing not the most confident macroeconomic statistics from the US, released yesterday. Among other things, the markets are disappointed with the sharp drop in retail sales in February, while back in January the indicator showed strong growth. The data on industrial production turned out to be no better either. In February, production volumes decreased by 2.2% MoM after growth by 1.1% MoM in January. Forecasts suggested an increase of 0.6% MoM. The data from New Zealand were also disappointing. New Zealand’s Global Dairy Trade Price Index, which was released yesterday, declined by 3.8% MoM in February after rising by 15% MoM last month. Analysts expected positive dynamics to remain at 9.5% MoM.
USD is posting corrective gains against JPY during today’s Asian session, recovering from a moderate decline the previous day. The instrument adds about 0.11% and is testing the level of 109.00 for a breakout. USD is supported by rather optimistic expectations from the publication of the results of the US Federal Reserve meeting. In addition, the markets are encouraged by the signing of a new bailout package for the US economy and are responding to the success of the US vaccination campaign. The latter looks especially good against the backdrop of European problems, where some countries have suspended vaccination with the drug from AstraZeneca, citing side effects that have appeared in a number of cases. This has already led to a noticeable increase in the incidence, and investors are talking about a full-fledged “third wave” of the pandemic in Europe.
Gold prices are showing moderate gains during today’s morning trading session, recovering to local highs since March 1, updated the day before. Investors are in no hurry to open new trading positions, preferring to wait for comments from the US Federal Reserve, whose minutes will be published today. It is expected that the American regulator will not change the parameters of monetary policy, and will also reiterate its commitment to low interest rates for a long time. To assess the prospects for changing the vector of monetary policy, employment indicators are used, as well as the current dynamics of inflationary pressures in the market, taking into account the size of the economic stimulus program from President Joe Biden. Gold is slightly supported by stabilization of US bond yields, which, however, continue to remain near record highs.