Thursday March 25th, 2021

Equity markets mixed, oil prices lower, US yields and US$ inchs higher ahead of US GDP and Initial jobless claims. Markets are looking for US data to turn positive after Wednesdays disappointing US Durable Goods Orders. GDP annualized(Q4) is expected to confirm 4.1% growth rate and jobless claims anticipated to fall. US President Biden is expected to set out his “Build Back Better” plan on March 31st, the plan’s cost could be greater than US$3T. Focus remains on Dem’s as they weigh increases in corporate and personal tax to raise revenue to pay for Presidents infrastructure plan. US President Biden will be holding his first news conference today at 1.15pm est. The Suez Canal remains blocked after a container ship runs aground and continues to threaten to disrupt global trade flows. Sino/US tensions continue as dual-listed Chinese tech stocks weaken as US SEC adopted a law called the Holding Foreign Companies Accountable act increasing fears that some companies may de-list firms from American exchanges. The US$ holds near 4-month has vs Euro while CNY drops 0.22% vs US$ and Asian currencies weaken 0.15% on average. Trading currencies remain mixed with NZD down 0.25%, AUD & JPY are weaker 0.35% while NOK is up 0.1%, MXN stronger up 0.35% and ZAR rallies 0.5%. Today alongside another day of Fed speech, investors will be focusing on US GDP and US Initial Jobless Claims for intraday direction.

Oil prices weakens 1% as a new round of covid lockdowns revive concerns about demand outweighs the Suez Canal disruptions. Markets are expecting a resolution to stranded container ship blocking the Suez Canal and anticipate further oil price weakness into next week. C$ ticked higher in early trading supported by near 14-month high Cad yields and the Suez Canal disruptions. Wednesday’s Ontario budget highlighted the cost of the pandemic and forecast 8 years of budget deficits. On a positive note, Canada was ranked 2nd in consulting firm Kearney’s Foreign Direct Investment Confidence Index. Bias we could see further Oil price weakness and expect to see further C$ weakness into next week. Support holds at 1.2550 with resistance at 1.2625, if breached look for potential extension to 1.2683 (Mar10th). 

Euro holds near multi-month lows amid covid concerns and ahead of ECB Lagarde speech. The EU’s 2-day summit starts today and will focus on vaccination rollout, the international role of the Euro, EU-US relations and will include speeches by the US President today as well as ECB President Lagarde. The EU’s growing frustration over vaccination sourcing and distribution may lead to heated discussions at today’s summit. The EU and UK have said they are looking for a “Win-Win” in their vaccine negotiations but will likely focus on advancing their domestic vaccination efforts. Bias remains further Euro weakness as 3rd-wave lockdowns continue and vaccination efforts continue to be slow. Support holds at 1.1790 while resistance also lowers to 1.1880.  

EURGBP falls haling its 3-day rally amid rising 3rd-wave fears and hawkish BOE’s Haldane comments “expects quick recovery”.  Support resets at .8580 (1.1655) with resistance rises to .8665 (1.1540).

GBP bounces its weekly lows amid easing vaccine worries and positive economic growth comments. The EU trade chief said that the EU was not targeting any specific country and said later they are working on a “Win Win situation” to expand vaccine supply between the UK and EU. BOE Haledane comments “expects quick recovery” and focus shifts to BOE Governor speech. The UK is just two weeks away from April 12th entering the 2nd stage of a 4-stage lockdown easing. Bias remains to be long GBP. Support holds at 1.3675, if breached look for 1.3610 while resistance remains at 1.3780.