Monday March 15th, 2021

Equity & oil markets strengthen, currency markets are mixed and US yields dip in early trading. US President Biden will be speaking today on the US stimulus plan, he will continue to warn about ongoing COVID issues and likely to discuss the next steps to boost the economy.  The focus will likely shift to expected tax increases to help fund the US recovery with speculation that the US President planning the first major federal tax hike since 1993 as a follow-up to the US$ 1.9T pandemic relieve bill. 10-year Treasury yields hold above 1.6% providing support to the US$ as markets await the FOMC meeting on March 16th–17th. In other news, China posted much stronger-than-expected Industrial Production and Retail Sales data for February with both beating expectations. Ireland and the Netherlands have joined a growing number of countries that have suspended the use of AstraZeneca over blood clot fears. CNY strengthens on strong data releases up 0.11%, while Asian currencies are flat on average vs US$. Trading currencies are mixed with AUD & NOK are down 0.2%, JPY down 0.05%, while NZD & MXN are up 0.3% and ZAR strengthens 0.4% vs US$. Focus will be on US empire manufacturing survey US President Biden’s speech. 

Oil prices strengthen towards US$70pb as China’s Jan/Feb refinery output rise 15% on strong fuel demand from increasing Chinese industrial output. C$ extends its rally to its strongest level since Feb2018 vs US$ at 1.2439 on rallying oil prices and from Friday’s strong job gains. Intraday Canadian Housing Starts and Canadian Manufacturing sales data releases today will be watched closely for further signs of Canadian economic recovery. Oil prices will remain a key driver for C$, bias remains to buy this US$ dip. Support at 1.2439, if breached we could see an extension towards 1.2395 (Feb2018) while resistance lowers 1.2550.

Euro eases in quiet trading as the US$ tracks slightly higher in early trading. Euro remains vulnerable for further weakness as more EU countries halt the roll out of the AstraZeneca vaccines, slowing their already sluggish vaccination efforts. Adding to Euro pressure is the ongoing ECB dovish tone and the ongoing ECB’s verbal intervention on the single currency. Chancellor Merkel’s party slumps to historic low in regional elections with Germans frustrated with the government’s handling of the pandemic and the ongoing lockdown restrictions. Bias remains to sell Euro on any rallies. Support holds at 1.1880 and resistance remains at 1.1975. 

EURGBP falls 0.25% intraday as Euro remains under pressure. Bias remains bearish Euro vaccinations remains slow and EU yields remain low.  Support holds .8560 (1.1682) with resistance lower 8650 (1.1560).

GBP holds steady vs US$ around 1.39 as markets stabilize post US stimulus relief bill signing. GBP yields strengthen ahead of Thursdays BoE rate decision after the BOE Governors comments that inflation is likely to pick up soon. The UK PM will be speaking today and will likely talk about AstraZeneca, further reduction of UK lockdowns and current UK’s vaccination efforts. Expect further market consolidation today in the absence of any major marketing moving economic releases. support holding at 1.3890 while resistance remains at 1.4015.