Monday June 7th, 2021

The US$ is flat, oil prices dip, equity markets are mixed while US yields strengthen on Treasury Secretary Yellen’s comments. Treasury Secretary Yellen said that President Biden’s US$4T spending plan would be good for the US, even if it contributes to rising inflation and results in higher interest rates. The Treasury Secretary’s comments were taken as a hint to tapering and helped lift the US$ and US yields. In other news, market confidence is growing that a bipartisan US infrastructure agreement is achievable as President Biden and Sen. Capito meet again today. In the UK the G7 ministers reached an accord backing the creation of a global minimum corporate tax rate of at least 15%. In China, exports continue to surge growing at 27.9% y/y and imports rallied 51.1%, its fastest pace since March 2020 fueled by strong global demand. In the currencies, the US$ edges higher after Treasury Secretary’s hit to tapering and risk-on sentiment eases. CNY dips 0.05% while Asian currencies are mixed with INR & SGD are flat, TWD tumbles 0.7% while PHP strengthens 0.15%. In trading currencies ZAR weakens 0.5%, AUD falls 0.2% NZD is flat while JPY is up 0.1%, NOK & MXN rally 0.6% vs US$. No key data releases for the US until Thursday’s Jobs & CPI data, so markets will focus on US President Bidens infrastructure negotiations today for direction. 

Oil prices dip after Brent Crude testing US$ 72.27 (May2019). Ongoing covid concerns in Asia and the rising prospect of increased Iranian oil supply continues to cap current oil strengthen. Demand optimism & OPEC+ supply curbs will provide ongoing support for oil into the summer. C$ opens flat vs the US$ after Friday’s disappointing jobs data, lower Cad yields and lower oil prices. Markets will be focused on Wednesday’s BoC Interest Rate decision & Rate Statement and for any signs of concern of the strengthening loonie. Intraday expect C$ to remain within current ranges with the absence of any market moving data. Support holds at 1.2050 with key pivot at 1.1916 (May2015) with resistance at 1.2150 with key resistance at 1.2235.

Euro cautiously holds 1.2150 levels as the US$ & US yields firm. The US Treasury Secretary’s comments on higher US rates & hinting towards tapering is keeping the Euro under pressure. No key data releases today and markets will have to wait until Thursday for ECB Interest Rate Decision and US Key CPI data results. Intraday expect Euro to remain under pressure as risk off eases and US$ & US yields picks up momentum. Support resets 1.2000, while resistance holds at 1.2200.

EURGBP eases as Euro remains under greater pressure as US yields & US$ picks up momentum. Support resets lower to .8550 (1.1695) with resistance remaining at .8665 (1.1540).

GBP holds steady amid doubts over the June 21st reopening. The Health Minister Hancock said it was “too soon” to say whether the June 21st plan could go ahead, markets expects further clarity on June 14th. Brexit – Northern Ireland issues continue which may see US President Biden intercede if it persists. With no key economic releases markets will be focused on UK’s variant cases and the prospects of reopening. Support holds 1.4080, with resistance at 1.4180, key resistance holds at 1.4235 (Feb2021).