Monday March 1st, 2021

Equity, commodity, oil, US$ index & US yields are all higher as markets await US ISM Manufacturing PMI data and US Stimulus updates. The US of Representatives passed the US$1.9T covid relief package on the weekend. The stimulus package now moves to the Senate where Dems have a narrow margin and may shelve the minimum wage plan to speed the aid package forward. The approval J&J vaccine in the US is significant and is helping to boost vaccine optimism. The RBA doubled its bond purchases, helping the AUD rebound and are expected to keep rates on hold. Yields will remain a primary focus this week as markets are focused on inflation concerns and today we will see a number of speeches from both the Fed and ECB. CNY up 0.15% amid disappointing Chinese Feb factory growth which dropped to 9-month lows. Asian currencies were mixed with THB up 1%, INR up 0.6% PHP up 0.3% while TWD is flat, SGD is down 0.05% and JPY is down 0.15% vs US$. Trading currencies are relatively quiet with NOK & ZAR are down 0.1%, NZD & MXN are Flat, while AUD advanced 0.3% after the RBA action. A busy day with five Fed Speeches, alongside a flurry of US manufacturing and PMI data.

Oil strengthens +1% on increased demand hopes from pandemic recovery optimism with the approval of the J&J vaccine, the US House passing the US$1.9T relief plan and the increase in EU zone factory activity. Weak Chinese factory data as well expectations that OPEC will increase output at its Thursday meeting helped cap intraday oil strength. C$ strengthens in early trading finding support from stronger oil prices. Investors continue to monitor US yields which are up slightly today, higher US yields are supporting a stronger US$. Intraday Canadian Current Account (Q4) and Manufacturing PMI (Feb), as well as US data releases and Fed comments will provide intraday direction. Support rises to 1.2665, and resistance resets at 1.2750.

Eur remains under pressure amid mixed EU data and higher US yields. Eurozone factory activity increased in February with Manufacturing PMI hit its highest levels since Oct2020, as well Manufacturing input prices PMI hit its highest level since Apr2011. Focus remains on German CPI data, as well later in the day both ECB De Guindos and ECB President Lagarde will both be speaking. Focus remains on US PMI data, US Stimulus updates and ECB & Fed comments. Bias remains to sell Euro on any rebounds. Support holds at 1.2020 with Resistance at 1.2100. EURGBP comes under renewed selling pressure, down 0.6% today and overall EURGBP is down 4% since December. The UK’s stronger vaccination program continues to provide the upper hand for the pound. Support holds 8600, while resistance 8735.

GBP holds steady amid upbeat UK Manufacturing PMI data and stronger US yields. UK Manufacturing PMI rose to 55.1 vs expectations of 54.9. Focus remains on rising US yields which is continues to boost the US$. Supporting the GBP is the UK vaccination strategy which has seen 30% of the UK population receiving their first dose and daily cases falling by over 6k. The UK Chancellor of the Exchequer is set to present his budget on Wednesday with markets expecting to see a rise in UK taxes. Overall bias remains positive for a stronger pound. Intraday focus remains on US data, US Fed speeches and updates on US stimulus. Support resets at 1.3885 while resistance at 1.4000.