[Market Review].
Biden unveiled over $2 trillion infrastructure plan. In a speech in Pittsburgh early this morning, President Biden unveiled an infrastructure plan of more than $2 trillion. Biden said the infrastructure plan includes both jobs and families and will create millions of jobs. On the issue of tax increases, Biden noted that there will be no increase in tax rates for those earning less than $400,000 a year.
Investors expect Biden’s infrastructure plan to make the market more nervous about inflationary concerns. The U.S. 10-year Treasury yield stood at 1.75% before Biden’s speech, setting a new intraday high.
Overall, Biden’s speech, however, did not elicit a particularly strong market reaction. Biden’s speech did not last long, and the main proposals of the infrastructure plan had been revealed to the media through White House officials prior to the speech. This suggests that Biden’s plan is already priced in, or that the market remains unconvinced that Biden’s plan can be passed by Congress in its current form.
The dollar index retreated. U.S. Treasury yields rose, providing support for the dollar. However, the intraday release of US ADP for March recorded an increase of 517,000, which was less than expected and weighed on the dollar, although the increase was the highest since last September. In addition to this, the dollar encountered selling pressure as the London market was set for the end of the month. The dollar index saw some retreat during the day.
Gold surged by $30. Despite the U.S. bond yields holding steady above 1.7%, the dollar fell sharply from recent highs, supporting gold prices. Gold surged $30 at one point, setting a new intraday high of $1,715.19 per ounce.
Silver saw big gains. Like gold, silver also saw big gains. Silver prices oscillated higher during the day, climbing from $24 all the way up to around $24.30.
The euro rose and then fell. In non-U.S. currencies, the euro rose and then fell. Europe stepped up preventive measures, hitting the euro. Germany and Italy announced the continuation of several control measures.
The British pound shook higher. Let’s look at the British pound again. The British pound oscillated higher against the dollar during the day, once rising above 1.38. The British macroeconomic data was better than market expectations, giving the pound some support. On the other hand, the dollar saw some profit-taking at four-month highs, which also posed a positive for the pound.
U.S. oil is under pressure sharply. Finally, take a look at the oil market. U.S. oil came under sharp pressure during the day, falling below the $60 mark. Oil prices were depressed by Europe’s stepped-up precautionary measures.
[Risk Warning].
U.S. dollar: positive factors still exist Short-term dollar outlook is optimistic
Bank of Tokyo-Mitsubishi UFJ believes that the passage of the $1.9 trillion stimulus package earlier this month will undoubtedly help boost U.S. consumer confidence. The recently released World Federation of Large Business consumer confidence soared from 90.4 to 109.7, the highest level since the outbreak of the new crown Epidemic. U.S. short-term economic growth is expected to be positive, and the outlook for the dollar remains optimistic.
Euro: short forces are still in Europe and the U.S. fear of falling to 1.17
Analysts at the financial website Fxstreet pointed out that the euro rebounded from the yearly low near 1.17 against the dollar, with upside momentum recovering slightly, and once touched the 1.1750 level upwards. However, the short side is still in control of the pair and could fall below 1.17 in the near term. There is no relevant support below 1.17 until last November’s low level of 1.16. As long as Europe and the US are below the 200-day moving average of 1.1864, the short-term trend remains negative forecast for them.
British pound: pound welcome seasonal benefits European pound expected to go down to 0.84
Credit Suisse said that April is a seasonally favorable month for the pound. This is related to the payment of dividends by British companies in April. Many British companies have operations overseas and therefore repatriate funds to pay these dividends. Normally, the strength of the pound in April is reversed by weakness in May, but for now, this provides a reason for the euro to dip to 0.84 against the pound in April.
[Key Outlook].
19:00 OPEC+ probability to extend production cut agreement
First, let’s focus on the OPEC+ meeting. In the last month, OPEC+ basically extended the production cut agreement. By this month, OPEC+ cut its 2021 crude demand growth forecast by 300,000 barrels per day, indicating that the agency is concerned about the market’s recovery prospects. It also means that OPEC+ will make a cautious decision today.
At yesterday’s Joint Ministerial Oversight Committee, OPEC Secretary General Barkindo also warned of caution. Sources said Saudi Arabia is ready to support an extension of OPEC+ production cuts into May and June and is prepared to extend its own voluntary cuts to boost oil prices.
JPMorgan expects OPEC+ to produce long production cuts planned through May and expects Saudi Arabia to extend its voluntary cuts through the end of June. Starting in June, OPEC+ may increase Crude Oil production at a rate of 500,000 barrels per day for the rest of August.
Some analysts point out that there is room for further upside in crude oil demand. On the one hand, global vaccination is progressing positively. On the other hand, the number of commercial flights has risen significantly compared to the beginning of the year, and U.S. airport throughput is slowly increasing. But there is still a need to be alert to the fact that the third wave of the epidemic in Europe could bring a relatively large uncertainty to the crude oil market.
20:30 US Initial Claims may be lower than the previous value
Next, let’s take a look at the initial jobless claims that will be released in the US. The number of initial claims in the US has remained near 700,000 in recent weeks, with last week’s figure of 684,000, the first Time it has been below 700,000 since the start of the new crown epidemic, CNBC said, adding that the unexpectedly sharp drop in initial jobless claims is a sign of increased hiring activity in the US economy.
Currently, the market expects that the number of initial jobless claims in the U.S. for the week to March 27 will be 680,000. If the published value is much higher than expected, the dollar index may come under pressure; conversely, if the published value is less than expected, the dollar index may strengthen.
As vaccinations continue to advance, the U.S. labor market is expected to continue to recover and initial claims may further decrease.
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