Morning Market Review 19 Feb 2021 – Fundamental Analysis
EUR is showing ambiguous trading during today’s Asian session, consolidating near 1.2100 after the instrument retraced the day before. The reason for yesterday’s resumption of “bullish” trend was the disappointing data from the US. Initial Jobless Claims for the week ending February 12 again showed an increase from 848K to 861K, while analysts expected their reduction to 765K. Continuing Jobless Claims for the week ending February 5 fell from 4.558M to 4.494M, which fell short of the most optimistic forecasts of 4.413M. Thus, investors are again convinced that it is still somewhat premature to talk about the beginning of a confident recovery of the American economy. As Jerome Powell said, it will take years for the labor market to return to its previous levels. Today, European investors are focused on statistics on business activity in the manufacturing and services sectors in Germany and the eurozone for February.
GBP is trading in a downtrend during today’s morning session, retreating from record highs since April 2018, renewed once again the day before. Investors are still buying GBP in the hope of a noticeable improvement in the epidemiological situation in the world and the early lifting of most of the quarantine restrictions in the UK in March. Additional support for the “bulls” on Thursday was provided by weak macroeconomic data from the US on the dynamics of jobless claims. On Friday, only the statistics on consumer confidence from the UK is still weakly supporting the buying sentiment. In February, the Gfk index rose from –28 to –23 points, which turned out to be much better than the forecast for growth to –27 points. Throughout the day, investors await the February Markit PMI data.
NZD is slightly declining against USD in trading in today’s Asian session, consolidating near 0.7200 after the correctional gains the day before. The instrument is supported by weak data from the US on the dynamics of jobless claims, which did not meet the optimistic forecasts for the recovery of the US economy. At the same time, the demand for the commodity NZD remained moderately high amid growing investor interest in risky assets and expensive oil. Today, investors are awaiting the publication of macroeconomic statistics from the US on the business activity and Existing Home Sales. Business activity in the US is expected to continue to moderately decline in February, which could serve as a fresh impetus for the acceleration of the USD 1.9 trillion stimulus package adoption.
USD shows flat dynamics against JPY in today’s Asian trading, developing the corrective momentum that formed last Wednesday, when the instrument retreated from its local highs since September 2020. Noticeable pressure on the positions of USD is exerted by statistics on jobless claims in the US, which turned out to be worse than its forecasts. In turn, JPY is getting support from the Japanese data. National Consumer Price Index excluding Food and Energy rose 0.1% YoY in January after falling 0.4% YoY in the previous month. Jibun Bank Manufacturing PMI rose from 49.8 to 50.6 in February, while analysts had expected the index to decline to 49.7.
Gold prices have been declining during today’s morning session, simultaneously updating record lows since July 2020. A new wave of sales replaced the uncertain attempt of the instrument to grow the day before, when the asset was supported by further weakening of USD. Among other things, investors reacted to the release of statistics on the dynamics of jobless claims, which turned out to be significantly worse than expected. Additional support for gold was provided by the US Fed minutes published on Wednesday. The regulator stressed its commitment to a soft monetary policy before the emergence of strong signals of growth in the US economy and the labor market in particular.
Manufacturing PMI. UK, 10:30 (GMT+2)
At 10:30 (GMT+2), data on the index of business activity in the UK manufacturing sector for February will be published. The indicator reflects the state of business activity in the national manufacturing industry and is calculated based on a survey of purchasing and supply managers of leading national enterprises in all industries. The index is expected to decline from 54.1 to 54.0 points.
Manufacturing PMI. Germany, 10:30 (GMT+2)
At 10:30 (GMT+2), preliminary data on the PMI in the manufacturing sector for February will be published in Germany. The indicator reflects the state of business activity in the national manufacturing industry and is based on a survey of purchasing and supply managers of leading national enterprises in all industries. The index is expected to decline from 57.1 to 56.5 points for February.
WTI Crude Oil:
Prices retreat from record highs. Today, during the Asian session, oil prices are actively falling, developing the “bearish” momentum that appeared yesterday.