Equity markets are mixed, oil prices steady, US$ and US yields are flat ahead of Fed’s Chairs comments at 9am est. The focus will remain on the Fed today starting with the Fed’s Chair Powell, then followed by Fed’s Daly, Quarles and Bowman will also be speaking throughout the day. This morning Fed’s Barkin commented that the US economy is “on the brink” of a complete recovery, but labor force participation remains a concern. In other news, The White House is planning a bill that includes infrastructure and tax hikes which will likely impact markets as the bill develops. In currency markets saw Turkish lira weaken significantly to near record lows after the President replaces the central bank chief. Worries that events in Turkey could cause disruptions in other financial markets saw a rebound in safe haven US$ and JPY. Sino/US trade relations remain strained after the US took a tough stance with China at their first face to face meeting in Alaska. CNY holds steady supported strong domestic fundamentals, while Asian currencies are down 0.1% on average. Trading currencies are mixed with JPY up 0.2%, NZD flat, NOK off 0.1%, AUD & ZAR down 0.2%, MXN tumbles 0.8%. All eyes will be on the Fed’s comments today.
Oil prices remain vulnerable as European lockdowns casts a shadow on recovery hopes. OPEC continues unprecedented output cuts to balance dropping demand concerns and its impact saw Saudi Aramco reporting its profits fell 44% from the impact of covid-19. C$ holds steady near 1.25 as it remains under pressure from weaker oil prices but supported by steady CDN yields better than expect retail sales on Friday. No market moving data releases today, so markets will focus on Fed’s speech and oil prices for direction. Support rises 1.2455 and resistance at 1.2550.
Euro holds steady near 1.19 amid fresh lockdowns and todays Fed’s Chair Powell’s speech. Vaccinations and lockdowns across Europe continue to cap any short-term potential of Eur strengthening. EU vaccination levels remain below 10% and rising virus cases is expected to see Germany to extend its lockdown into a fifth month, also we saw fresh lockdown measures in France started over the weekend. The weaker TRY (Turkish Lira) is seeing a move to safe haven currencies and could add pressure to the EUR. Support resets at 1.1835 next, resistance lowers to 1.1930.
EURGBP strengthens 0.15% as the EU looks set to block AstraZeneca exports to the UK. Bias remains for further Euro weakness longer term vs GBP. Support holds at .8500 (1.1764) with resistance lower to .8625 (1.1594).
GBP dips below 1.3850 amid vaccine concerns and the Fed’s Chair Powell speech. The UK has vaccinated 50% of all adults, but the threat of EU blocking exports of AstraZeneca could set the UK back. The UK PM will reportedly be calling EU leaders in a bid to avert vaccine export blocks. Intraday the pounds direction will likely be driven by the Fed’s Chairs comments. Support drops to 1.3800 while resistance lowers to 1.3880, if breached 1.3940 next.