Morning Market Review 26 March 2021
EUR is correcting slightly against USD during today’s Asian session, trying to recover from a three-day “bearish” rally, which resulted in the instrument renewing its lows since November 11, 2020. Some support for the pair is still provided by macroeconomic data from the eurozone on business activity, which stand out especially against the background of the difficult epidemiological situation in the region. Many European countries are forced to maintain significant restrictions on the movement of citizens and the work of small and medium-sized businesses, which slows down the process of economic recovery. Problems with vaccination against the background of the temporary ban of the drug from AstraZeneca and the bureaucratic delays in the process of approving the Russian Sputnik V vaccine have negative effect as well. Investors are currently focused on the European Council summit, where on Thursday the prospects for maintaining the current restrictions were actively discussed. The leaders of European states preferred to abandon secondary political issues and concentrate on the problems of vaccination and the pandemic in general.
GBP is showing corrective gains against USD in today’s morning session, developing the “bullish” signal formed the day before. Technical factors are the reason for the strengthening of the instrument, while a further decrease in the yield of American bonds weakens USD. In turn, yesterday USD received moderate support from macroeconomic publications in the US. The revised data reflected the growth of the American economy in Q4 2020 by 4.3% YoY, which turned out to be 0.2% better than the forecast. The number of initial jobless claims for the week ending March 19 fell sharply from 781K to 684K, which also outstripped positive market expectations of a decline to 730K. Continuous jobless claims for the first time in a long time fell below 4M and consolidated at 3.87M after 4.134M in the previous period. Today, the data on the retail sales in the UK for February is expected to be published.
AUD is recovering against USD in today’s Asian trading, again trying to consolidate above 0.7600. USD is weakening, despite yesterday’s publication of strong macroeconomic statistics from the USA. Investors assess the prospects for new difficulties in the economy provoked by the blocking of the Suez Canal and deterioration in relations between Washington and Beijing. The canal has remained blocked since Tuesday, with more than 200 ships currently waiting in line. In turn, new difficulties in relations between the USA and China were caused by the refusal of a number of American companies to cooperate with Chinese cotton suppliers from Xinjiang province, where, according to Washington, human rights are grossly violated.
USD posted marginally gains against JPY in today’s Asian session, hitting local highs since March 17. Moderate support for the instrument is provided by yesterday’s macroeconomic publications from the US. In particular, investors were optimistic about the decrease in the number of initial jobless claims below the psychological level of 700K. In turn, the Japanese statistics published today hinders the development of a more confident uptrend for the instrument. Tokyo CPI excluding Food and Energy in March accelerated from +0.2% YoY to +0.3% YoY, which turned out to be better than neutral forecasts by experts. Tokyo CPI excluding Fresh Food fell 0.1% YoY after falling 0.3% YoY in February.
Gold prices are recovering during today’s morning trading session, recouping Thursday’s losses. The pressure on USD continued to be exerted by the yield of US Treasury bonds, which is retreating from the annual highs, updated last week. In turn, USD strengthened against the backdrop of the publication of strong macroeconomic statistics from the USA, as well as against the backdrop of a new round of deterioration in relations between Washington and Beijing. The blocking of the Suez Canal could significantly affect the dynamics on the commodity markets, especially in terms of oil trade.