Fundamental Analysis Morning Market Review 21 April 2021

EnclaveFX Ltd
Apr 21, 2021

Morning Market Review


EUR is slightly declining against USD during today’s Asian trading session, again approaching strong support at 1.2000. The day before, the instrument showed active growth and managed to update local highs since March 3; however, closer to the end of the daytime session, USD managed to win back its losses and break into zero. There were few significant fundamental factors for the correction of USD, as the macroeconomic background on Tuesday remained neutral. Investors paid attention only to the publication of data on the Producer Price Index in Germany. In March, the indicator increased by 0.9% MoM after growth of 0.7% MoM in February. Analysts had expected it to decelerate to 0.6% MoM. On an annualized basis, the indicator increased by 3.7% YoY after growing by 1.9% YoY, which also outpaced forecasts of 3.3% YoY. Traders await a meeting of the European Central Bank (ECB) on interest rates with a follow-up press conference, which will take place on April 22.


GBP is declining against USD during today’s morning trading session, developing the corrective momentum that was formed the day before, when the instrument retreated from its local highs since the beginning of March. GBP was under pressure from the growing USD, which managed to reverse the stable downtrend, supported by a further drop in the yield of US Treasury bonds. In turn, Tuesday’s macroeconomic data from the UK supported the buying sentiment for GBP. Claimant Count Change in March fell sharply from 86.6K to 10.1K, which turned out to be better than market expectations at 24.5K. ILO Unemployment Rate in February (according to data for the last 3 months) also decreased from 5% to 4.9% with the projected growth rate to 5.1%. Today, investors are awaiting the publication of macroeconomic statistics from the UK on the dynamics of consumer prices.


AUD is weakening against USD in today’s Asian session, continuing the development of a downtrend that has been trying to form in the short term. The pair is responding to USD’s attempt to strengthen, while the macroeconomic background provides moderate support for AUD. Data released today indicated a 1.4% MoM growth in retail sales in Australia in March, which was better than market expectations of 1.0% MoM. In February, sales showed negative dynamics at the level of –0.8% MoM. Westpac Leading Index rose 0.38% MoM over the same period, after rising 0.02% MoM in the previous month.


USD is trading near zero against JPY during today’s morning session, consolidating near 108.00. Corrective sentiments, which are gradually appearing on the market, provide USD with moderate support, but it is not enough to reverse the stable downtrend in the short term. There are also no noticeable signals for a more confident USD growth, as the macroeconomic background in the US is still relatively neutral. The most important data will appear only on Friday, when the April business activity statistics from Markit are released, as well as the March data on the dynamics of New Home Sales will be published. In addition, by the end of April, investors are expecting another speech by US President Joe Biden, at which he is to present the details of his new USD 2 billion infrastructure modernization plan.


Gold prices are showing a slight increase during today’s Asian session, developing the “bullish” signal that formed the day before, and quickly approaching local highs since February 25, updated at the beginning of the week. The instrument is still supported by the low yield of US Treasury bonds, which are holding in a narrow range in anticipation of new drivers in the market. It is likely that one such driver could be President Joe Biden’s plan to modernize the US infrastructure, which he will present in detail by the end of April.


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