Global bond yields soften driving risk-on equity buying, dollar is mixed
Global treasury yields are softer following last week’s dramatic rush higher. Investors are quickly back into risk-on mood, which is pushing prices higher for global stocks and commodities. The US dollar is mixed, weakening against the commodity-currencies and strengthening against the safe-haven currencies. Gold and oil are both slightly higher. There are plenty of economic data releases this week to start the month, and traders await comments by Fed Chair Powell on Thursday.
Monday: US ISM Manufacturing Purchasing Managers’ Index (Feb), US Construction Spending (Jan)
Tuesday: Canada GDP growth (Q4), Eurozone CPI (Feb), RBA monetary policy
Wednesday: US ISM Services Purchasing Managers’ Index (Feb), Federal Reserve releases Beige Book
Thursday: Eurozone Unemployment (Jan), OPEC meeting on output, Fed Chair Powell discusses economy
Friday: US Jobs Report (Feb), US International Trade Balance (Jan), Canada International Merchandise Trade (Jan)
March 1, 2021
EUR/USD 1.2049 GBP/USD 1.3926 USD/CAD 1.2672 AUD/USD 0.7757 USD/JPY 106.62 USD/CNH 6.4742 USD/ILS 3.2985 USD/MXN 20.6670 USD/CHF 0.9144 USD/INR 73.5550 USD/BRL 5.5979 USD/SGD 1.3304 USD/DKK 6.1739 USD/SEK 8.4355 USD/NOK 8.5905
The dollar index is up slightly to start the week, strengthening against the safe-haven JPY and Swiss franc, and weakening against the commodity-currencies, (in order) Norwegian krone, Russian ruble, Canadian dollar and Mexican peso. US stocks are opening higher in line with generally higher global stock prices. US Treasury yields are steady (10yr at 1.42%), while global bond yields are generally lower. Traders await a slew of economic data this week as well as comments from several Fed officials.GBP
Last week, the UK pound peaked at $1.4237 and then sold off below $1.40, its biggest down week so far this year. This morning, the UK pound is fairly steady, continuing to trade under $1.40. Traders await UK Chancellor of the Exchequer Rishi Sunak’s presentation of the nation’s budget on Thursday. He has promised to help support the economy for as long as the pandemic persists.EUR
The euro has edged lower with little news to effect prices. Germany’s inflation rate for February was unchanged at 1.6%, as expected. German Retail Sales and Unemployment are released tomorrow.CAD
The Canadian dollar is up about 0.50% on better demand for commodities and commodity currencies. Oil is trading at $61.50, up slightly over the weekend and ahead of Thursday’s OPEC meeting to discuss output. Traders also look forward to tomorrow’s GDP reading for December and Q4.ASIA/PACIFIC
Australian bond yields fell as much as 32 bps after the Reserve Bank unexpectedly doubled the amount of bonds they normally purchase (QE) in order to curtail the recent rise in bond yields. The Australian dollar gained by nearly 0.5% on the news.
The Japanese yen fell slightly with the reduced demand for safe-haven currencies in the risk-on market mood.
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