Key Releases - Fundamental Analysis 13 Feb 2021
United States of America
Today, the US dollar is strengthening against its main competitors – the euro, the pound, and the yen.
Investors are still focused on the labor market. After the statements of the Fed head Jerome Powell about its unsatisfactory condition, weak data on the initial jobless claims was released. The growth of applications exceeded the forecasted value of 757K and amounted to 793K. The dynamics of the decrease in the indicator is preserved, but it is going slower than the market would like. Philadelphia Fed Chairman Patrick Harker, like a number of other Fed officials, tried to calm investors fearing a jump in inflation after the launch of a USD 1.9 trillion stimulus program. He said that inflation is unlikely to exceed 2.0% in the near future. According to Harker, the risk of a serious rise in prices must be taken into account, but “not in the short term”.
Today, the euro strengthens against the yen but is weakening against the pound and the dollar.
In the absence of significant economic releases, investors remain focused on the situation with the coronavirus in Europe. Yesterday, the head of the European Commission, Ursula von der Leyen, admitted that the authorities made a number of mistakes in the process of introducing mass vaccinations and underestimated the problem of lack of production capacity. Nevertheless, despite the initially weak pace, von der Leyen believes it is possible to vaccinate up to 70% of the EU population by the end of summer. We also note that the German government plans to provide additional assistance to the national economy. This time, German airports will receive 900 million euros in aid, which should help the aviation sector cope with the effects of the coronavirus.
The British currency today is strengthening against the yen and the euro but is weakening against the US dollar.
Investors are focused on the publication of data on GDP and industrial output. In Q4 2020, the UK economy grew by 1.0% (against the forecast of 0.5%). However, in 2020 in general, it decreased by 9.9%. The Bank of England predicts a decline in GDP by another 4.0% in Q1 2021, but after that the situation will begin to improve, as the economy will feel the effect of vaccination of the population. GDP may return to pre-crisis levels in early 2022. December industrial output data was ambiguous. MoM, the indicator increased by 0.2%, being below the forecasted value of 0.5%. YoY, production fell by 3.3% (better than the 3.8% forecast).
The yen is weakening today against its main competitors – USD, GBP, and EUR.
In the absence of important macroeconomic releases, JPY is trading under the influence of technical factors. On Monday, investors are awaiting the release of data on the country’s GDP in Q4 2020. The Japanese economy is expected to slow down growth from 5.3% to 2.3% QoQ and from 22.9% to 9.5% YoY. This year, the Japanese GDP can expect a serious decline. According to a Reuters poll, economists expect a 5.0% contraction in Q1 and a 5.3% contraction in the fiscal year ending in March. Hosting the Olympic Games throughout the year will not be able to greatly help the economy, since the construction of most large infrastructure projects has already been completed, and the number of spectators who can watch the Olympics live may be significantly limited.
AUD is strengthening today against its main competitors – GBP, USD, JPY, and EUR.
The Australian dollar is pressured after a new lockdown in Victoria state, which the market feared. It was introduced 5 days after an outbreak of a more virulent strain of coronavirus in one of the quarantine hotels. Citizens must now stay at home except for going out for essential purchases, exercise, or commuting to work. Supermarkets will remain open, but other shops, gyms, and entertainment venues will be closed. It is likely that if the situation worsens, quarantine measures can be extended.
Oil quotes have an ambiguous dynamics today: the morning decline was replaced by growth and recovery of positions.
Prices are influenced by opposite factors. They’re now pressured by statements of the International Energy Agency (IEA) and OPEC. The IEA said the supply of oil continues to outstrip demand, although the spread of coronavirus vaccinations is expected to help balance the market soon. According to OPEC, global demand will recover during the year, but slower than expected. However, a noticeable decline in prices is hindered by hopes for an early launch of a large financial aid package for the US economy, which should stimulate the growth of energy consumption.