22nd February 2021 - The AUD extended its rally on Friday to highest level in 35 months

Good Morning,

Market Headlines

US equities faded near the close, leaving the S&P500 down 0.2% on the day. The Federal Reserve published its semi-annual monetary policy report, which showed that policymakers believe that the risks of coming business failures “remain considerable” in the country. Chief Jerome Powell is due to testify before Congress this week, for the first time in the Biden’s era.

US 2yr treasury yields remained around 0.11%, while the 10yr yield rose from 1.29% to 1.36% – the highest since March 2020. Australian 3yr government bond yields (futures) rose from 0.23% to 0.26%, while the 10yr yield rose from 1.46% to 1.52% - the highest since March 2020.

Commodities, Brent crude oil futures fell 1.6% to $62.90, copper jumped 4.4% to a fresh 8-year high, and gold rose 0.5%.

Overnight Currency Ranges

AUD/USD: 0.7783 – 0.7877 (two year high)

EUR/USD: 1.2091 – 1.2144

GBP/USD: 1.3970 – 1.4036

USD/JPY: 105.24 – 105.72

USD/CAD: 1.2595 – 1.2696

NZD/USD: 0.7224 – 0.7314

AUD/JPY: 82.10 – 83.15

AUD/NZD: 1.0766 – 1.0794

AUD Thoughts

AUD/USD cleared some key technical levels on Friday with offering interest now expected ahead of 0.7900 while demand likely rests back toward the break-up area of 0.7820.

Event Risk Data Today

Germany: The recovery of the February IFO Business Climate Survey will be hampered by new strains and ongoing restrictions.

US: The Chicago Fed Activity Index has remained in positive territory ahead of the January update, pointing to above-trend growth. The January leading Index is expected to hold at 0.3%, with stock prices, new orders growth, and building permits the strongest drivers of late. Following this, we will receive the February Dallas Fed Index; the recovery slowed in January on a broad-based softness across the subcomponents. At 07:30 AEDT, the FOMC’s Bowman will discuss economic inclusion.