Tech stocks firm, bonds and dollar steady
In a slight risk-on mood, investors are buying US equities - particularly tech stocks - as global bond yields were stable overnight. European equities are lower despite much better-than-expected eurozone manufacturing data. Investors were comforted by Fed Chair Powell’s assurances that the Fed has the tools necessary to handle the modest inflation expected in an economic recovery this year. Bond traders await results from today’s and tomorrow’s Treasury auctions. Firm oil prices fueled gains in the petro-currencies: MXN, NOK, RUB, and CAD.
“Thinking is the hardest work there is, which is probably the reason so few engage in it.”
March 24, 2021
EUR/USD 1.1822 GBP/USD 1.3706 USD/CAD 1.2572 AUD/USD 0.7607 USD/JPY 108.91 USD/CNH 6.5247 USD/ILS 3.2933 USD/MXN 20.8470 USD/CHF 0.9363 USD/INR 72.5625 USD/BRL 5.5419 USD/SGD 1.3462 USD/DKK 6.2896 USD/SEK 8.5932 USD/NOK 8.5910
The dollar index edged higher, but with mixed performances against its peer currencies, weakening against commodity currencies and strengthening against the others. Fed Chair Powell commented that inflation may rise as the economy reopens – “there may be a surge in spending and bottlenecks in the economy, but their effect on inflation will not be large or persistent, and the Fed has the tools to deal with that.”GBP
The UK pound was the weakest currency overnight, dropping to its lowest level in six weeks. The ongoing vaccine dispute between the UK and EU continues to rile investors. UK Inflation data for February was weaker than expected, forcing some traders to reconsider their bullish reflationary expectations for the UK economy. The FTSE 100 is lower by 0.27%.EUR
The euro is slightly lower despite better-than-expected Eurozone Manufacturing PMI and Services PMI for March. German Chancellor Angela Merkel did an about-face today by stating that there would not be a strict lockdown over Easter, which followed a day of confusion and criticism. Merkel said her earlier decision to lockdown was a mistake and her responsibility, but was formed “with the best of intentions.”CAD
The loonie edged higher amid firm oil prices and the slightly risk-on mood in the markets. Traders were impressed with the Bank of Canada’s decision to unwind its extraordinary emergency liquidity programs as they see improvement in the functioning of financial markets.ASIA/PACIFIC
Asian currencies were broadly lower overnight, as Covid lockdowns, restrictions and vaccine deployment issues point to an increasingly murky outlook for economic recovery. The firing of Turkey’s central banker and the resulting sell-off of the Turkish lira has fueled some uncertainty in the demand for all EM assets.
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