Thursday April 8th, 2021

Oil prices slightly weaker, equity markets mixed, US$ flat & US yields unchanged ahead of Fed Chair’s speech and US initial jobless claims. The FOMC meeting minutes reflected the Fed’s commitment to continue to support the US economy beyond the current economic rebound. The Fed Chair Powell is set to speak again today, and he is expected to echo the FOMC meeting minutes. US Jobless claims will be watched closely as they are expected to drop below 700k after weakening to 719k last week. The US President said that he is open to negotiating on his corporate tax hike proposal but reiterates that the country must act boldly on his US$2T infrastructure plan. The US Senate is planning to hold a hearing on Apr14th to bolster US tech research and develop efforts in a bid to address Chinese competition. The Iran nuclear deal talks continued Wednesday with EU, Russian, Chinese and UK diplomats acting as intermediaries as Tehran rejected face-to-face meetings with the US. The US$ index holds steady, as US yields slip after the FOMC minutes. CNY weakened 0.13% after the Chinese Central Bank set a weaker mid-day fixing, INR dropped 0.4% as covid concerns continue and Asian currencies were down 0.2% on average vs US$. Trading currencies were mixed with NOK down 0.3%, while MXN & ZAR were up 0.1% and JPY, AUD & NZD are stronger 0.25% vs US$. Intraday the Fed Chairs Speech and Initial Jobless claims will dictate intraday direction.

Oil prices remain under pressure after US gasoline stocks surge in the US and globally as covid-lockdown measures, alongside reduce travel continue to curb gasoline demand. Adding to oil price pressure is the rising anticipation that some sanctions could be lifted on Iran, which will add to global oil supplies. C$ rebounded from its fresh 1-week low but remains under pressure as commodity prices continue to slide. C$ is likely to weaken in the short term, but as trade shipments are expected to continue to recover into H2 as global economy picks up and our bias then shifts to a stronger C$ vs US$. No key Canadian data so markets will focus on Fed chairs speech, oil prices and initial jobless claims for intraday direction. Support rises to 1.2570 with resistance holding at 1.2660. 

Euro failed to hold above 1.19 amid vaccination concerns and US data. Mounting concerns about the AstraZeneca vaccination has raised concerns that the EU’s inoculation program could face fresh delays. Germany is considering extending its lockdown, while France and Italy remain under severe restrictions. The ECB meeting minutes today will likely reiterate the bank’s commitment to keeping long term yields low. Bias remains to sell Euro on this rally. Support resets to 1.1840 with resistance at 1.1920

EURGBP rally stalls as fresh vaccination concerns within the EU and ongoing lockdowns cap the Euro’s rally.  Our bias remains to sell Euro on rallies as the prospect remains high that the UK’s economy will rebound quicker than its EU counterpart as the UK reopens its economy.  Support rebounds to .8525 (1.1730) with resistance at .8650 (1.1560).

GBP continues under pressure as the US$ stabilizes and potential delays for the UK vaccination campaign threatens to impact the UK economic recovery. Rising AstraZeneca blood clot concerns and the decision to deprioritize using AZ for those under 30 is likely to cause delays to the UK’s vaccination campaign. A positive for the pound, was the Feds ongoing support for asset purchases which will likely cap US yields and put renewed pressure on the US$. Intraday US FED chairs comments and US data will provide market direction. Support drops to 1.3700 and resistance resets at 1.3885.