Fundamental Analysis Morning Market Review 24 Feb 2021

Feb 24, 2021


 EUR shows flat dynamics against USD during today’s Asian session, consolidating after updating local highs since January 25 the day before. EUR position on Tuesday was under pressure from not the most confident macroeconomic statistics from the eurozone, as well as the interim results of the speech of the US Federal Reserve Chairman Jerome Powell in the US Congress. The Consumer Price Index in the eurozone in January slowed from +0.3% MoM to +0.2% MoM, which coincided with the forecasts. In annual terms, inflation retained the same rate of growth by 0.9% YoY. At the same time, the Core Consumer Price Index showed a wider spread: –0.5% MoM and +1.4% YoY. Today, European investors are awaiting updated statistics from Germany on GDP dynamics for Q4 2020.


 GBP maintains strong upside momentum against USD in the short term, hitting record highs since April 2018 during today’s Asian session. Investors reacted very optimistically to the televised address of British Prime Minister Boris Johnson, who announced the lifting of quarantine in the country closer to July. Meanwhile, the UK is steadily increasing the pace of vaccination, currently occupying the third place in the world. To date, more than a quarter of the total population has been vaccinated, and in the near future, the rate of vaccination is likely to only increase. Today, investors are focused on the Monetary Policy Report Hearings, which is an important factor for the Bank of England’s decision to further stimulate the national economy.


 NZD has shown strong gains against USD during today’s morning session, updating record highs since April 2018. The RBNZ’s interest rate decision is in the spotlight on Wednesday. As expected, the regulator did not change the parameters of monetary policy, maintaining the key interest rate at 0.25%. In the follow-up letter, the regulator noted the success of the national economy during the pandemic. The RBNZ noted that commodity prices and export volumes remained fairly stable, thus avoiding additional problems in the economy. At the same time, the Monetary Policy Committee pointed to the persistence of risks of a worsening epidemiological situation and additional restrictions due to the emergence of new strains of the virus.


 USD is noticeably strengthening against JPY at today’s trading in Asia, developing the correctional momentum formed the day before and recovering from the active decline at the end of last week. Investors reacted quite optimistically to the speech of the US Fed Chair Jerome Powell in the framework of the annual report to the US Congress. The head of the regulator praised the success of American health care, noting that the current pace of vaccination gives hope that 2021 will pass without new lockdowns. Indirectly, Powell also called on Congress for approval of the USD 1.9 trillion stimulus bill, despite criticism by many analysts for being too expensive. Markets fear that such a significant injection of funds into the economy will provoke a surge in inflation and in stock indices, which are already largely overvalued. Interesting statistics from Japan will appear only on Friday with the release of January data on industrial production and retail sales.


 Gold prices are demonstrating multidirectional dynamics during today’s Asian session, correcting after an uncertain decline the day before, which did not allow the instrument to consolidate at new local highs since February 16. The pressure on the position of gold on Tuesday was exerted by preliminary results of the speech of the US Federal Reserve Chair Jerome Powell in Congress. The speech by the Chairman of the regulator managed to maintain the optimistic sentiment in the market and strengthened the belief that Congress will still approve Joe Biden’s USD 1.9 trillion stimulus bill soon.