Thursday February 18th, 2021

The US$, equities and yields dip, while oil prices remain firm ahead of US jobs data today. Investors are focusing on US jobless claims which are expected to improve to 765k vs 793k previous. The FOMC minutes highlighted that the US economy “far from” the central bank goals, with the summary saying it will “take some time for substantial further progress to be achieved” meaning its policy is unlikely to change anytime soon. US stimulus concerns are growing that the plan may be delayed or decreased, could impact overall US$ strengthening. China returns from its Luna New Year holiday with CNY down 0.2% while Asian currencies are mixed with TWD & INR up 0.3%, SGD up 0.1% with THB flat and KRW down 0.05%. Trading currencies rallied with JPY & MXN up 0.2%, NZD up 0.3%, AUD & NOK up 0.4% and ZAR rallies 0.5% vs US$. Focus on the ECB Monetary Policy Meeting, Fed Brainard Speech and US Initial Jobless Claims, Building Permits & Housing Starts for intraday direction.

Oil prices continue to climb due to the extreme weather conditions in Texas which has caused power outages and a fall of 40% in US oil production. Weather conditions are expected to ease into next week and production should rebound. C$ rebounds from its lows on Wednesday as US yields ease and oil prices continue to rally. PM Trudeau says more vaccines are on the way, Ontario reduces lockdown amid warnings from doctors of variant spread. Focus remains on oil prices and US jobless claims today. Support holds at 1.2655 with resistance at 1.2760.

Eur strengthens as the US$ dips ahead of US Jobless claims. This is a US$ weaker move vs a supported Euro rally. Today’s ECB Monetary Policy Meeting key take away vigilance on FX rates, no room for complacency, not every increase in nominal yields should be interpreted as unwarranted tightening. Concerns remain over the EU’s sluggish vaccination progress, despite new deliveries of vaccine doses. Italian PM Draghi has called on Italians to pull together and focus on EU integration. Intraday ECB and US jobless claims data will be monitored. Bias remains sell Eur rallies. Support holds at 1.2020 while resistance remains at 1.2110. Eur/GBP sees GBP hits its highest-level vs Eur since March 2020, rising 2% month to date. GBP continues to be driven by the UK’s strong vaccination program. Next key support sits at 8520, if breached EUR/GBP could weaken further to .8292.

GBP rallies 100 bps vs US$ amid lower US yields and upbeat UK coronavirus data. The US$ dipped as yields eased after the FOMC minutes and ahead of US jobless claims. Falling virus cases across the UK, a strong vaccination program is putting pressure on the UK PM to reduce lockdown restrictions. Concerns are rising over the longer-term impact of the covid virus in the UK. In a recent survey 2.6mio UK workers expected to lose their job in the next three months, suggesting longer-lasting damage to the economy from the coronavirus. Overall markets analysts remain positive for a stronger pound vs its peers. Support rises to 1.3885 while key resistance remains at 1.3997 (26th Apr 18).