Thursday April 1st, 2021

Equity and oil prices up, US$ is flat while US yields dip ahead of US Jobless Claims and US Manufacturing PMI data. Focus shifts to US weekly initial jobless claims which are expected to extend their fall beyond last week’s post-pandemic low of 684k. Also critical today will be the US ISM Manufacturing PMI for March, which is also expected strong industrial activity, which will set the stage for Fridays US Non-farm payrolls report. Wednesday, President Biden unveiled his US$2.25T infrastructure and recovery plan, future tax hikes that will fund the infrastructure plan within 15 years. Higher tax rates may have a negative impact on equities, it will require less debt issuance which will likely reduce pressure on US yield and could weigh on the US$. President Bident will hold his first cabinet meeting at 1.15pm est which is likely to focus on issues related to the US$1.9T stimulus and the US$2.25T infrastructure plan. OPEC+ will meet today to determine if they will increase or maintain current output cuts. CNY dips 0.25% as a survey showed slower growth at China’s factories, Asian currencies also dropped 0.1% on average vs US$. Trading currencies are mixed with JPY & NZD down 0.1%, AUD fell 0.4% while NOK & MXN are up 0.1% on stronger oil prices, while ZAR strengthened 0.25% vs US$. US data releases will drive intraday direction.

Oil prices strengthen +1.5% on a combination growth demand optimism related to the US infrastructure spending plan and anticipation OPEC+ will rollover their current output cuts. Markets will focus on the OPEC+ meeting today with some investors speculating that Russia may press for small increases in output. C$ holds on to Wednesday’s gains, finding support from firmer oil prices and positive Canadian growth data which surpassed expectations. BoC Governor in comments yesterday stopped short of suggesting a policy response to Canadians mounting debt “worrying” as Canadian home prices continue to rise. Ontario is expected to announce a new one month lockdown today which could have a negative knock-on impact to C$. Intraday the focus will be on the OPEC meeting, Canadian building permits & Manufacturing PMI, as well as a US PMI and Initial Jobless Claims for direction. Support holds at 1.2550 with resistance at 1.2646. 

Euro remains under pressure, stalling below 1.1750 amid new French lockdown restrictions. Positive Manufacturing PMI data which met or exceeded expectations across the major EU countries wasn’t enough to rally the Euro. Rising virus cases and fresh 3rd wave lockdowns continue to hamper the EU’s recovery efforts as vaccination rates remains sluggish. Focus is on US data releases for intraday direction as Europe heads in to 2 days of Easter holidays. Support remains at 1.1695 while resistance holding at 1.1805.  

EURGBP opens up flat as markets wind down for Easter holidays. Increasing EU lockdowns and sluggish vaccinations efforts continues to support a stronger bias for GBP vs EUR. Support holds at .8475 (1.1800) with resistance at .8580 (1.1655).

GBP dips back below 1.38 despite positive UK PMI data as it awaits US data releases. UK PMI beat expectations and markets now switch their attention to the US Manufacturing PMI and US Jobless claims. The UK’s strong vaccination efforts and relaxation of lockdown restrictions will continue to support the pound vs its peers but may be vulnerable to short term weakness vs US$. Heading into the Easter holiday, expect markets to remain within their current range. Support holds 1.3740 while resistance sits at 1.3865.