Thursday April 22nd, 2021

The US$ is flat, oil prices ease, equity markets and US yields are up amid surging global covid cases and US Jobs data. US initial jobless claims are expected to rise to 617K vs last week’s 576k strong result. Global coronavirus cases continue to hold at weekly record high levels of 925K average cases per day despite increasing vaccination efforts. India reported the world’s highest daily rise in covid cases at +314k today. India, together with Brazil, USA & Turkey 7-day average of new virus cases is at 418k cases, which 45% of the world’s new virus cases. In other news the US led global climate summit will host global leaders including Russia & China. At the summit President Biden will announce a pledge to halve US emissions by 2030. In currency, the US$ is finding support as risk on sentiment stalls, CNY is flat, INR rallies 0.5% despite covid worries and Asian currencies also flat on average. Trading currencies are mixed with AUD & JPY both flat, NOK is up 0.3%, NZD rallies 0.4% while ZAR & MXN fall 0.2% vs US$. Intraday the ECB rate decision, Initial Jobless claims will help provide market direction.

Oil prices slip for a 3rd-day from a combination of growing pandemic fears as global cases hit new record highs and US crude inventories continue to rise which are likely to stall demand. C$ rallied over 1% on Wednesday as markets welcomed the BOC’s move to reduce its asset purchases, increasing growth sentiment, and the prospect of rate hikes into H2/2022. The covid-pressure on oil prices will likely cap short-term C$ strengthening with the prospect of a rebound towards 1.26. Intraday oil prices, US jobs data and Canadian Housing price index will provide direction. Support resets to 1.2470 with resistance at 1.2680. 

Euro strengthens ahead of the ECB meeting. The ECB is expected to keep rates unchanged, but focus will be on the ECB’s level of asset purchases. The EU’s rising vaccination levels and EBC’s economic comments should help provide further support to the Euro. Intraday ECB comments and US jobs data will provide direction, bias remains to sell Euro on rallies. Support rises to 1.1980 and resistance resetting at 1.2075.

EURGBP – GBP slips vs EUR ahead of the ECB meeting. The prospect that rising vaccination levels will help the EU begin to exit current lockdowns and support economic recovery. Support holds to .8585 (1.11650) with resistance remaining at .8700 (1.1495).

GBP remains under pressure amid weakening global risk sentiment. Record high virus cases is capping risk sentiment and will keep underlying support to the US$. The UK is on the verge of 50% of its population with at least 1 inoculation dose and continues to reopen its economy which is longer term positive for the pound. The fundamental picture in the UK remains favorable, but the pound remains vulnerable to the US$ safe-haven buying. Support at 1.3870, while resistance resets at 1.3960.