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Morning Market Review Fundamental Analysis 26 Feb 2021

Morning Market Review Fundamental Analysis 26 Feb 2021


 EUR is trading in both directions against USD during today’s Asian session. At the opening of trading, the pair was steadily declining; however, EUR managed to win back half of its losses, receiving support from vulnerable positions in USD. The pressure on USD intensified yesterday after the US Fed Chair Jerome Powell reiterated the regulator’s adherence to a soft monetary policy, noting that there are no talks about its correction towards tightening in the near future at all. In turn, USD was supported on Thursday by strong data from the US on the dynamics of jobless claims, which turned out to be much better than projected. Today, investors are focused on statistics from the USA on the dynamics of personal income and spending in January. In addition, after the opening of the American session, the market will receive data on the PMI in Chicago and the level of consumer sentiment from the University of Michigan for February.


 GBP is declining against USD during today’s Asian session, developing a strong “bearish” momentum formed the day before. The pair is actively testing the level of 1.3975 for a breakdown, consolidating below the strong psychological level of 1.4000. Analysts cite technical factors as the reason for the emergence of the downtrend for the instrument, since the fundamental picture on the market changes insignificantly. Optimism about the rapid spread of the coronavirus vaccine in the UK is gradually fading, as this is largely already incorporated into the current GBP quotes. In turn, the pressure on GBP yesterday was exerted by strong macroeconomic statistics from the United States, which somewhat smoothed out the “dovish” rhetoric of the US Fed Chair, Jerome Powell. Today, British investors are awaiting a speech by the representative of the Bank of England, David Ramsden.


 NZD is declining against USD during today’s trading in Asia, trying to develop a downward signal that appeared the day before, when the instrument retreated from its record highs. NZD managed to regain most of its losses, but “bearish” sentiment still prevails, which is partly due to the technical correction of the purchased instrument at the end of the week. Macroeconomic statistics from New Zealand released on Friday do not provide significant support to the pair. ANZ Consumer Confidence Index in February fell from 113.8 to 113.1 points, which turned out to be worse than the market’s neutral forecasts. New Zealand exports slowed in January from 5.38B to 4.19B dollars. Imports also fell from 5.32B to 4.82B dollars over the same period, leading to a trade deficit of 626M dollars in January over the previous month.


 USD is showing an uncertain decline against JPY in today’s morning session. The instrument has already managed to win back some of the losses at the opening and is consolidating near the level of 106.00. The focus of traders’ attention on Friday is on a large block of macroeconomic statistics from Japan, which, however, does not provide significant support to JPY. The volume of retail sales in January fell by 0.5% MoM after reduction by 0.7% MoM in the previous month. On an annualized basis, sales plunged 2.4% YoY after falling 0.2% YoY a month earlier. Market forecasts suggested a decline of 2.6% YoY. Tokyo CPI excluding Fresh Food in February fell by 0.3% YoY, which was only 0.1% YoY better than market expectations.


 Gold prices are consolidating today after an active decline the day before, which once again brought the instrument closer to record lows, updated on February 19. Analysts associate such a sharp drop in quotations of the precious metal with another jump in the yield of US Treasury bonds, as well as general optimism in the market, which pushes investors to invest in risky assets. Gold almost completely ignored the statements of the US Fed Chair, Jerome Powell, that the regulator is not considering the possibility of tightening monetary policy in the foreseeable future. If anything, the Fed’s rhetoric will remain the same until the US labor market recovers, which, as Powell said, will take years.

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