[Market Review
The 10-year U.S. bond yield accelerated its retreat. 10-year U.S. bond yield retreated for the second consecutive trading day, and the one-day decline expanded significantly, and has now fallen to near 1.6%. Overnight, U.S. stocks and Crude Oil both fell sharply, and safe-haven funds poured into U.S. bonds as markets worried about the increase in new crown cases and new Epidemic prevention measures in Germany, signaling that the global economic restart process will be delayed. At the same Time, the 2-year U.S. Treasury auction results were solid, and the market reacted little to the testimony of Federal Reserve Chairman Jerome Powell. The U.S. Treasury on Tuesday marked the sale of $60 billion of two-year Treasury bonds, with a bid rate of 0.152% and a bid multiple of 2.54, higher than the previous month’s 2.44. For the current situation of U.S. debt, some industry insiders expect that the most violent sell-off storm may have passed. Meanwhile the recent climb in U.S. bond yields to key technical levels also seemed to attract buyers on Tuesday, boosting prices. The U.S. Treasury will also bid $61 billion in five-year Treasurys on Wednesday and $62 billion in seven-year Treasurys on Thursday. Investors can focus on that.
The U.S. dollar index climbed above the 92 mark. Next, let’s focus on the U.S. dollar index. The U.S. index has shaken up during the day. Earlier, Asian markets were sluggish and the New Zealand dollar plunged after the New Zealand government offered property market regulation measures, heating up risk aversion in the market. The Congressional testimony statements of Fed Chairman Jerome Powell and U.S. Treasury Secretary Yellen later in the day also drew market attention. Tracking found that Powell’s statement, almost the same as what he said at the press conference after the Fed’s interest rate resolution last week. Powell said price levels are expected to rise this year as the epidemic eases and Americans go back out and spend money, but he downplayed concerns that Inflation may be too high. Powell expects inflation to rise, but not out of control, and the Federal Reserve has the tools to deal with it. Powell also said that thanks to the unprecedented fiscal and monetary stimulus, the U.S. economy has mostly improved, there is progress in the economic recovery, but there is still a long way to go. U.S. Treasury Secretary Yellen on Tuesday referred to potential tax policy changes that would help pay for the stimulus program, and the current administration is expected to look at tax reform policies. At the same time Yellen said there are no immediate plans to extend the maturity of the national debt. The next thing we need to watch is that Powell and Yellen will testify before the Senate Banking Committee on Wednesday. This may affect the trend of the dollar.
Gold continues to be under pressure. A stronger dollar has overshadowed the impact of falling U.S. Treasury yields and raised the cost of holding gold for holders of other currencies. Gold fell $10 on Tuesday.
Silver oscillated lower. Silver followed gold’s dive near the U.S. session, and the decline continued into the early morning hours, eventually closing down 2.64 percent at $25.06 an ounce.
The British pound touched a new six-week low. In non-U.S. currencies, the pound broke below the 1.38 handle against the dollar and touched a six-week low due to the debate between the U.K. and the EU over the export of AstraZeneca vaccines.
The euro performed weakly. In addition to the pound, the euro also came under pressure to the downside during the day. The euro fell by more than 80 points against the dollar during the day and is now running around 1.1850.
U.S. oil fell below the $58 mark. Finally, take a look at the oil market. U.S. oil is under significant intraday pressure and has now fallen below the $58 mark. The prospect of a rapid recovery in crude oil consumption has been overshadowed by the tightening of anti-disease restrictions in several European countries. Next week OPEC+ will meet to decide on its production policy for May. We can focus our attention on it.
[Risk Warning].
GBP: Pound faces downside risks Focus on 1.36-1.3610
According to OCBC Singapore, the current debate between the UK and the EU over the export of the AstraZeneca vaccine seems to have a greater impact on the pound than on the euro. Looking ahead, the pound could face further downward pressure against the dollar if the debate over vaccines leads to a slowdown in the pace of vaccination within the UK. The pair has now broken below the 1.38 handle and there is a risk of further downside to 1.36-1.3610.
New Zealand dollar: a combination of positive factors New Zealand dollar is expected to rise to 0.74
The key risk to the New Zealand dollar is a change in the global financial environment, and if rising Treasury yields continue to affect the stock market, the New Zealand dollar will become one of the biggest casualties in the G10 foreign exchange market.
Lira: crisis looming Turkish lira fears continued decline
Commerzbank raised its year-end target price for the dollar against the Turkish lira to 10.0 in anticipation of the next lira crisis looming. Analysts say the trigger for the next lira crisis, which could be the same as what triggered the 2018 lira crisis, is the Turkish president’s resolute reaffirmation of his non-traditional monetary policy philosophy, indicating that policy experiments with uncertainty will now take place.
[Key Outlook].
15:00 UK February CPI may be strong. First, to focus on the UK will be released CPI data. The UK CPI recorded a monthly rate of -0.2% in January and rose to an annual rate of 0.7%. Although the epidemic has reduced the demand for goods and services, and UK inflation has fallen sharply away from the 2% target set by the Bank of England since the outbreak of the new crown epidemic in March last year, UK inflation has picked up in the last two months and the market generally expects the annual CPI rate to rise further in February.
Currently, the market is expected to February CPI monthly rate of 0.5%, if the published value is greater than expected, or good pound; conversely, will be negative pound.
At the same time, investors also need to pay attention to the same time the annual CPI rate and the monthly retail price index, if this set of data is better than expected, the pound may strengthen.
22:30 EIA crude oil inventories may increase
Next, take a look at EIA crude oil inventories, which were released last week with a decrease of 1.047 million barrels. This morning, API crude oil inventories recorded an increase of 2.927 million barrels, exceeding market expectations, and gasoline inventories unexpectedly decreased. Based on past experience, API inventory data and EIA inventory data have a relatively strong positive correlation, so EIA crude oil inventories may also decrease.
Even so, we still need to pay attention to the current market expectation that EIA crude oil inventory may decrease by 908,000 barrels in the week of March 19, if the published data exceeds the expectation, oil prices may short fall; if the inventory data is less than expected, oil prices are expected to strengthen.
Oil prices jumped again because of growing market concerns that a surge in new cases in Europe will drag down the pace of demand recovery, especially during the peak tourism summer season. In response to the third wave of public health crisis, Germany, Europe’s largest oil consumer, announced on Monday an extension of the embargo until April 18 and asked people to stay at Home during Easter. Meanwhile, in an effort to curb the movement of people, Britain announced a £5,000 fine for those traveling abroad before the end of June. This will all continue to limit demand for crude oil.
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