Morning Market Review 22 March 2021
EUR is showing insignificant growth during today’s Asian session, recovering after the “bearish” ending of last week’s trading and the renewal of local lows since March 10. The sales of the instrument were again triggered by an increase in the yield of US bonds, which managed to reach the level of 1.7% for the first time since January 2020. Macroeconomic statistics from Germany published on Friday turned out to be ambiguous and did not have a noticeable effect on the pair’s dynamics. One way or another, the PPI in February corrected from +1.4% MoM to +0.7% MoM, which coincided with the market forecasts. In annual terms, the indicator accelerated from +0.9% YoY to +1.9% YoY, which turned out to be close to forecasts at +2.0% YoY. Today, in addition to the speech of the Chair of the US Federal Reserve Jerome Powell, investors will be focused on the monthly report of the Deutsche Bundesbank followed by a speech by its President Jens Weidmann.
GBP is trading with multidirectional dynamics against USD during today’s Asian session, consolidating near the local lows updated at the end of the previous trading week. USD is again in demand on the market amid growing yields on US Treasury bonds, which are renewing their annual highs. The USD 1.9 trillion program to support the American economy proposed by President Joe Biden also adds optimism to the market. GBP, in turn, is supported by relatively good macroeconomic statistics, as well as by the success of the vaccination campaign, which so far shows the best results among all European countries. Data from the UK released on Friday indicated a rise in the Gfk Consumer Confidence Index in March from –23 to –16 points, while the forecasts assumed an increase only to –20 points. It is likely that today the activity on the instrument will remain reduced, as British investors await tomorrow’s publication of the UK labor market report and the speech of the Governor of the Bank of England Andrew Bailey.
NZD is recovering, correcting after the “bearish” end of trading last week, which led to the renewal of local lows since March 10. The instrument is still supported mainly by technical factors, while the fundamental picture changes little. The high yields of US Treasuries, as well as positive prospects for a faster than expected recovery of the US economy, remain the main reasons for the strengthening of USD. NZD, in turn, is responding positively to the recovery in trading activity in the world after significant quarantine restrictions. However, this does not apply to many European countries, where, due to a significant increase in the incidence of diseases, governments are forced to return restrictive measures. Today, American investors are awaiting a speech by the Chair of the US Federal Reserve Jerome Powell, as well as representatives of the regulator Mary Daly and Randal Quarles.
USD is significantly strengthening against JPY in trading in today’s Asian session, offsetting the negative gap at the opening of the new week. As before, investors are focused on the statistics on the yield of US bonds, as well as the results of the meeting of the Bank of Japan on interest rates last Friday. The Japanese regulator kept the parameters of monetary policy unchanged, while slightly expanding (from +/–0.2 to +/–0.25) the corridor for changing the rate from the initial level of 0%. The characteristics of the quantitative easing program have not changed either; however, the Bank promised to buy risky assets only as a last resort.
Gold prices are showing multidirectional trading dynamics today, holding close to local highs since March 1, updated on March 18. The instrument quotes significantly increased last Friday, responding to the correction in the yield of US Treasuries, which retreated from their 14-month highs. Another factor supporting the gold rate was the current monetary policy of the world’s major financial regulators. It is expected that a long period of low rates, as well as significant injections of funds into the global economy, will contribute to a noticeable increase in inflation.