Tuesday March 30th, 2021

Equity markets mixed, oil prices weaker while US$ and US Treasury yields strengthen ahead of President Biden’s speech on infrastructure spending. Markets remain focused March 31st when President Biden is expected unveil the details of his plan US$ +3T infrastructure plan. Anticipation of more stimulus is stoking inflation expectations and helping the US 10-year Treasury yields hit their highest levels since January 2020. The US expects roughly 90% of Americans will be able to receive a covid vaccine by mid-April which is boosting confidence in the US$. Elsewhere, global leaders call for a pandemic treaty in a joint letter published in newspapers around the world, with signatures including the UK PM, French President and German Chancellor. Virus cases continue to rise globally with France and Germany increasing lockdowns, while rising cases in the US saw CDC director warning of “impending doom”. US$ hits 1 year highs vs JPY down 0.45%, while CNY flat and Asian currencies are down 0.15% on average vs US$. Trading currencies are down slightly with NZD, AUD, NOK & MXN are down 0.1% while ZAR is down 0.2% vs US$. Today Fed Williams and Quarles are speaking, as well data releases include US Consumer Confidence & US Housing Price Index will provide intraday direction. 

Oil prices dip -1% as markets balance the opening of the Suez Canal vs next week’s OPEC meeting that is likely to see current output cuts extended. Overall, demand concerns related to the 3rd-wave lockdowns across Europe will likely keep pressure on oil prices. C$ remains within a relatively tight range, but with weakening oil prices and a strengthening US$ will likely see pressure increase on the C$ to weaken. No key Canadian data today so focus remains on US treasury yields and oil prices for direction. C$ remains strong vs non-US$ currencies with Canadian yields rising in tandem with the US. Support holds at 1.2550 with resistance at 1.2625, if breached look for potential extension to 1.2683 (Mar10th). 

Eur weakness continues testing fresh 4-month lows amid vaccination struggles and strengthening US$. Europe continues to battle through rising virus cases in Germany & France is putting both political leaders under-fire for not acting more aggressively. Markets remain focused on vaccinations administered as the key gauge for economic recovery, and as such the EU at 15 per 100 remains 3 times lower than its US and UK counterparts. Support lowers to 1.1695 while resistance lowering to 1.1805.  

EURGBP – Vaccination progress continues to be primary differentiator between the UK vs the EU which supporting the stronger UK economic rebound. Support holds at .8475 (1.1800) with resistance at .8580 (1.1655).

GBP fights to hold above 1.3750 amid a stronger US$. The Pound is under pressure from the rallying US$, but investor interest is returning as the UK enters into its next re-opening cycle. A positive sign for the UK was seen as London reported zero deaths from covid on Monday, this is the first time in six-months. Ongoing vaccinations remains a key requirement for the UK if it is to continue to reopen its economy. GBP is vulnerable to short term weakness vs the US$, but the pound remains positive vs Euro. Support holds 1.3740 while resistance sits at 1.3865.