12th March 2021 - ECB subtle batting higher yields

Good Morning,

Market Headlines

Wall Street surged, with the DJIA posting fresh all-time highs and the S&P flirting with record highs. The Nasdaq added over 2%. US weekly initial jobless claims rose 712k (est. 725k), continuing claims 4.144m (est. 4.200m). JOLTS job openings in January rose to 6.917m (est. 6.7m) - a post pandemic high and close to pre-pandemic levels.

President Biden is set to sign the USD1.9tr stimulus plan today, a day earlier than previously indicated.

The ECB had a monetary policy meeting, and as widely anticipated, it maintained rates unchanged, alongside the size of PEPP. Policymakers announced that bond purchases over the next quarter to be conducted at a significantly higher pace than during the first months of this year. German bund yields fell on the headline, but EUR/USD hold on to the higher ground. Within her press conference, President Christine Lagarde said that the ECB is watching the exchange rate, adding that the central bank is ready to recalibrate its tools.

Commodities, Brent crude oil futures rose 2.3% to $69.40, copper rose 2.5%, iron ore rose 4.1% to $170.75, and gold fell 0.1%.

Overnight Currency Ranges

AUD/USD 0.7724 0.7790

EUR/USD 1.1915 1.1990

GBP/USD 1.3918 1.3987

USD/JPY 108.36 108.815

NZD/USD 0.7186 0.7240

USD/CAD 1.2538 1.2623

USD/CNH 6.4812 6.5044

AUD/JPY 83.72 84.53

AUD/NZD 1.0740 1.0778

AUD Thoughts

AUD/USD peaked at a high of 0.7790 overnight with offering interest expected again ahead of 0.7820 while demand has grown and is expected on any dip toward 0.7700.

Event Risk Data Today

New Zealand: Ahead of the February update, the manufacturing PMI has shown that conditions have been firming in recent months.

Euro Area: Industrial production is set for a modest 0.3% rise in January, but that will still leave output down 2.2% on the year.

US: The February PPI will continue to be supported by rising energy and commodity prices (market f/c: 0.4%). Meanwhile, the March University of Michigan sentiment survey is expected to advance to 78.5 on the vaccine rollout and the stimulus package.