[Market Review].
The dollar index rose for the fourth straight day. U.S. 10-year Treasury yields hovered high above 1.5%, while the dollar index continued to climb, hitting a high of 92.42, the fourth consecutive day of gains. The latest statistics show that the cumulative number of confirmed cases in the United States exceeded 29 million. However, U.S. Treasury Secretary Yellen believes that the U.S. is in a K-shaped recovery. U.S. wholesale sales recorded a monthly rate of 4.9% in January, a new high since June last year. The financial website Forexlive commented that the industrial side of the economy shows no signs of slowing down. It should be noted that the Federal Reserve survey shows that the median Inflation expectation is likely to rise from 3% to 3.1% in February. In addition, some analysts say that once the $1.9 trillion stimulus package hits the ground, it may also push up inflation. In response, Yellen said she will pay close attention and will have a response. Later today, the U.S. House of Representatives will vote on the Senate’s version of the bill. Democrats hope to have it signed into law by March 14.
Gold plunged $20. Gold plunged $20 during the day, hitting a low of $1,676.71 an ounce, a new low since June last year, driven by rising U.S. bond yields and the dollar. Originally, the market expected the expectation of the passage of the U.S. stimulus package, will drive gold prices higher. However, the United States and the global economic growth prospects improve, so that the recent gold prices continue to pressure.
Silver rose and then fell. Like gold, silver is also hard to escape a drop. Earlier, silver prices once touched $25.9 per ounce upward, then shocked downward, once below $25.
The euro fell more than 60 points. The dollar strengthened, while non-US currencies were generally under pressure. The euro fell more than 60 points against the dollar during the day, hitting a new low in three and a half months. Eurozone Sentix investor confidence index recorded a positive 5 in March, compared with a negative 0.2 in February, the highest since February last year. However, German industrial production data unexpectedly fell in January due to a sharp drop in construction activity caused by cold weather. The Economy Ministry said that for now, the future industrial outlook continues to be neutral, with weak domestic demand caused by anti-Epidemic measures offsetting strong overseas demand.
The British pound oscillated in a narrow range. Let’s look at the British pound again. The pound did not follow the euro’s decline, with GBPUSD oscillating narrowly in the 1.38-1.3850 range mainly during the day. Although the UK has the highest number of neonatal deaths in Europe, the country has outperformed other countries on the vaccine front, with more than 21 million people having received their first dose of the neonatal vaccine. Schools in England opened Monday as part of the U.K.’s plan to ease the embargo, a first step toward a return to normalcy. Last week U.K. Chancellor of the Exchequer John Sunac unveiled his budget plan, which includes a further extension of the New Crown stimulus package and an increase in corporation tax starting in 2023. Last week’s budget plan supports the market’s view that the future recovery of the UK economy is in a favorable situation. However, we still need to pay attention to the fact that Bank of England Governor Bailey reiterated that quantitative easing measures will end at the end of 2021.
U.S. oil fell nearly 3%. Finally, a look at the oil market. U.S. oil came under significant intraday pressure, hitting a low of $64.55 a barrel. on March 7, the Saudi Defense Ministry issued a news release saying that Houthis had carried out an attack on Saudi Aramco’s oil loading facilities. However, the drone was shot down by Saudi air defense systems before the attack could be launched. The global Crude Oil market reacted strongly to this. However, the rise in U.S. bond yields and the strength of the U.S. dollar caused oil prices to weaken again.
[Risk Warning].
U.S. bonds: Treasury issuance and CPI data may drive yields higher
Institutional analysis says that although U.S. bond yields have temporarily stabilized, U.S. bond issuance and CPI data, could be the catalyst for further pushing U.S. bond yields higher. Weak demand for the 10-year Treasury later today or the 30-year issue the next day would indicate that Treasury supply remains an issue despite a pause in the increase in issuance. In addition, with market inflation expectations near their highest level since 2014, a higher than expected CPI number could support the view that nominal bond yields will need to move higher.
Crude Oil: Demand has not fully recovered Oil prices are expected to struggle to break 70
The chief executive of leading oil company Total said oil prices are “very high” as OPEC maintains production discipline, but inventories remain high and demand has not fully recovered from the outbreak. The executive said that oil prices will not break $ 70 this year, oil prices should hover between $ 50 and $ 60.
Australian dollar: the positive factors will dissipate the institutions recommended shorting the Australian dollar
Danske Bank said the main reasons for the rise in industrial metal prices were a weaker dollar, a weaker supply situation, lower inventories and rising demand from Asia. Looking ahead, the U.S. dollar is expected to remain stable or rise, metal supply should have room to increase, and the positive factors in Asia are expected to dissipate. The bank recommends shorting AUDUSD with an entry point of 0.77 and a target of 0.73 with a stop loss at 0.7832.
[Key Outlook].
18:00 Eurozone Q4 GDP fears weak performance
First to focus on the eurozone GDP. the second quarter of last year, the data fell to -14.7%, the third quarter recorded -4.3%. In the middle of last month, the eurozone announced the fourth quarter GDP annual rate revised to -5%.
Currently, the market expects the final value of the euro zone fourth quarter GDP annual rate of -5%, if the published value is better than expected, or good for the euro; conversely, or negative for the euro.
It can be seen that the eurozone economy is still weakening at the end of last year, which is not unrelated to the epidemic prevention and control, but as the vaccination continues, Europe’s economy will gradually pick up this year, the euro is also expected to strengthen.
Wednesday 05:30 API crude oil inventories may decrease
Next, come to focus on API crude oil inventories. Last week, API reported that US crude oil inventories increased by 7.356 million barrels. The subsequent release of EIA crude oil inventories increased by 21.563 million barrels, and financial blog Zero Hedge commented that the EIA data followed the API data with a shocking record increase in crude oil inventories and a record drop in gasoline inventories. After plummeting the week before, gasoline demand rebounded last week, but remained well below pre-epidemic levels.
By the end of the week, the market expects that U.S. API crude oil inventories could fall by 833,000 barrels for the week ending March 5. If the release is larger than expected, oil prices may come under pressure; conversely, oil prices may rise.
The current need to pay attention to the U.S. House of Representatives will vote on the 1.9 trillion stimulus bill, the current market generally expects that the bill can be successfully passed, which will support the oil market.
Wednesday 06:00 Lowe’s is expected to repeat the old tune
Finally, pay attention to the upcoming speech of the Australian Fed President Lowe. In the last week, the Australian Federal Reserve maintained the benchmark interest rate at 0.1% and the target for the 3-year Treasury yield was unchanged at 0.1%. The Fed said that Australia’s economic recovery is stronger than previously expected. The Australian Fed will not raise interest rates until CPI reaches its target level. Ready to buy any amount of bonds to maintain the 3-year Treasury yield target. Ready to expand quantitative easing measures if needed. Based on this, we believe that Lowe may indicate that it will maintain the current interest rate as well as the 3-year Treasury yield target, and will expand the scale of bond purchases if necessary. At the same Time, he is likely to be confident in the economic recovery and work to lower the unemployment rate and help inflation rise to 2%.
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