Friday March 26th, 2021

Equity, oil, US yields and the US$ index all tick higher on better market mood and upbeat data. Positive data and an optimistic outlook from the US Presidents comments Thursday increased market sentiment. At his first news conference since taking office President Biden said he will run for re-election in 2024. The President increased his pledge from 100 million vaccine doses to 200 million vaccine doses in his first hundred days. On China, the President said he would prevent China from passing the US to become the most powerful country in the world, vowing to invest heavily to ensure America will prevail. The President speech focused on infrastructure spending to move the US forward and set the stage for March 31st speech to outline his multi-trillion-dollar infrastructure plan. Sino/West tensions continue with China imposing fresh sanctions on the UK today. CNY strengthens up 0.1%, while Asian currencies were up 0.15% on average vs US$. Trading currencies saw JPY ease 0.3%, while ZAR is up 0.1%, MXN strengthens 0.25%, AUD, NOK and NZD rally 0.5% vs US$. Positive US GDP and initial jobless claims on Thursday, with better-than-expected EU & UK data today is setting a stage for a flurry of US data releases today. Focus will be on US Personal Spending, Core Personal Consumption Expenditure and Michigan Consumer Sentiment Index releases today. 

Oil prices remain active +1.5% this morning as markets balance between 3rd wave slowing demand across Europe vs Suez Canal blockage. The Suez Canal is estimated to delay delivery of 2 million barrels per day, and delays are expected to take several weeks to completely clear. C$ rebounded from a fresh 2-week low of 1.2628, strengthening as Oil prices ticked higher with expectations the Suez Canal will remain blocked until mid-next week. Quebec’s doesn’t expect a balanced budget until 2028 so the recovery can take hold and expects a deficit of C$12.3B in fiscal 2021. Suez Canal delays may present US$ buying opportunities with expectations C$ will weaken as supply comes back on line. Support holds at 1.2550 with resistance at 1.2625, if breached look for potential extension to 1.2683 (Mar10th). 

Eur remains below 1.18 despite upbeat data and improving market sentiment. Better-than-expected Spanish GDP, strong Italian Business / Consumer confidence and positive German IFO data provided minor support to the Euro. The EU eased its rhetoric regarding banning exports of vaccines to avoid concerns to damaging the supply line. In an attempt to control virus cases, Germany is now asking travelers from France to provide a negative PCR test, the move has raised tensions between the two counties. The rising number of covid cases across Europe and the sluggish vaccine rollouts is keeping pressure on the Euro vs the US$ and the Pound. Support lowers to 1.1745 while resistance also drops to 1.1840.  

EURGBP continued weaker with the GBP strengthening on positive data and economic optimism as markets focus on Aprils next phase of lockdown easing.  Support lowers .8530 (1.1723) with resistance resets to .8620 (1.1600)

GBP bounces on vaccine optimism, upbeat data and despite a firm US$. EU leaders toned down their comments and stop short of export bans on vaccines. UK Retail Sales was positive for February up 2.1% and markets remain optimistic for the UK recovery with the next phase of reopening in April. China imposed sanctions on 9 UK citizens including 5 MPs in retaliation for measures taken by the UK government on Monday over human rights abuses against the Uighur Muslim minority group. Focus will remain on US data releases for intraday direction. Support holds at 1.3675, if breached look for 1.3610 while resistance remains at 1.3780.