Global equites lower on rising US bond yields, dollar mixed

Rising inflation expectations and US bond yields firming back up near 1.50% are causing consternation amongst global equity investors. Asian equities were generally 2-3% lower and European equities were 0.5-1% lower. US equities are opening slightly lower following higher jobless claims than the previous week. The dollar is mixed against its peer currencies, the commodity currencies are outperformers. Traders await today’s results of the OPEC+ meeting and comments from Fed Chair Powell, and tomorrow’s US employment report for February.

“Imagination is more important than knowledge.”
Albert Einstein
  • FX Rates
    March 4, 2021

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  • USD

    The dollar is mixed overnight: commodity currencies – the Canadian and Australian dollars, and the Norwegian krone - outperformed vs the USD. Safe haven currencies underperformed – the Swiss franc and Japanese yen. Jobless claims were slightly higher than the previous week, but Nonfarm Productivity, although negative, was better than expected. Traders await comments from Fed Chair Powell who will probably reassure markets that the Fed will remain patient in tapering monetary stimulus and QE until the pandemic has ended.

    GBP

    Chancellor Rishi Sunak’s budget announcement indicated he will continue to focus on stimulus for the economy, and not address the record budget deficit for another two years. The UK pound moved little, and remains within a tight 1.3850-1.40 trading range in place over the last week.

    EUR

    The euro is lower on the day, but remains above 1.20. EZ Unemployment for January held steady at 8.1%, but was better than expectations of 8.3%. Retail Sales were down 5.9% in January, much worse than both the previous month’s +1.8% and expectations of -1.4%.

    CAD

    The Canadian dollar was the top performing currency overnight, but only gained 0.25%. Traders await the outcome of OPEC+ (plus Russia), with production output the key topic.

    ASIA/PACIFIC

    The Japanese yen was the weakest performer overnight, dropping nearly 0.5% versus the dollar. The USD/JPY surged to fresh highs near 107.50, its highest level since last July. Demand for a JGB 30-year auction drew the weakest demand in nearly five years.

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Scott Petruska, CFA
WRITTEN BY
Scott Petruska, CFA

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