Ahead of the “Big Two” (JYELL aka Jerome Powell and Janet Yellen) speaking later today, US stock have opened up mixed, bond yields are off but trying to make a comeback and the dollar is approaching its highs of the day. Consensus thinks there will be more of the same from the world’s most important policy makers with the Fed remaining super accommodative. Remarks released ahead of the hearing have been positive with Yellen seeing it as possible that the US returns to full employment in 2022, while Powell has said the recovery looks to be strengthening. Inflation is seen as increasing but falling back down again so any deviation from this path will see big moves in the major markets.
Virus-related developments have come to the fore once more, with restrictions in Europe weighing on the single currency and commodities. Germany announced an extension of Covid restrictions until mid-April with a five-day circuit breaker around Easter.
This has certainly upset the continent’s recovery apple cart and is set to cause a revision in market hopes around any kind of regional rebound in the second quarter.
Cable clinging on, one year on…
With vaccine optimism in the UK well known, what other reasons are there to buy sterling in the near term? GBP/USD hit a six-week low earlier in the session as delays in vaccines shipments, strict social restrictions and a spat with the EU are not helping sentiment, especially as the country marks the one-year anniversary of the first national lockdowns. We also had gloomy data this morning that showed the biggest monthly increase in jobless claims since the first pandemic wave.
Cable is weak today having broken the 1.38 level that marked the bottom of the March trading channel and the pair is now trading precariously on the 50-day moving average that has supported the pair since late 2020.
The January highs have acted as support so far today around 1.3750 but bears will be trying to push the pair towards the next floor at 1.37.
Fresh selling in Oil
WTI is suffering more losses today, down over 3% and below the crucial $60 marker. The stronger dollar and increasing worries that new lockdowns and slow vaccine rollouts in Europe will hurt demand recovery are piling the pressure on the bulls. Fresh weakness may be signalling that the brief recovery after last week’s huge fall is over.
Thursday’s lows at $58.30 is pivotal with the broken $60 level now offering solid resistance. Prices are currently toying with the 50-day moving average just below $59.
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