25th March 2021 - US Dollar continues to rally

Good Morning,

Market Headlines

Risk sentiment was mixed as energy shares and oil prices jumped on news that the Suez Canal remained blocked by a giant container ship. Flash PMI readings were strong. The S&P500 is unchanged while oil is up 5.5%. Business activity in March surprised on the upside in the EU, according to Markit preliminary estimates. PMIs from other economies also indicated a better economic shape in the mentioned month, although UK inflation unexpectedly shrank in February.

Commodities, the oil complex reversed yesterday’s plunge with Brent crude oil futures rising +5.5% back to $64.00 as the blocking of the Suez Canal raised supply concerns and strong PMI’s suggested that growth prospects remain relatively sound. Iron ore futures scraped back losses with Dalian futures back to CNY1074/mt (SGX at $156/mt). Gold also steadied to USD1735/oz.

AUD/USD made new lows of 0.7583 and had settled just below 0.7600 late in the North American session.

Overnight Currency Ranges

AUD/USD 0.7583 0.7634

EUR/USD 1.1812 1.1854

GBP/USD 1.3675 1.3753

USD/JPY 108.45 109.95

NZD/USD 0.6956 0.7007

USD/CAD 1.2543 1.2608

USD/CNH 6.5146 6.5291

AUD/JPY 82.30 83.04

AUD/NZD 1.0878 1.0931

AUD Thoughts

The slow data week in the Asia trading time zone continues with little on the horizon likely to be market moving. To the US, where personal income for February may decline as the impact from January's $600 stimulus cheques lessens in the monthly computation. Personal spending gains may prove stronger than those in the monthly retail sales figures, reflecting both less of a run-up in January and a shift into services amidst the start of reopening.

AUD/USD remained at the mercy of the stronger USD overnight and traded to a new recent low of 0.7583. The next level of support can be found at 0.7560 and again at 0.75c while offering interest remains thick up toward 0.7750.

Event Risk Data Today

US: Initial jobless claims ticked up last week, but this is in the context of a broader downward trend (market f/c: 730k). The final estimate of Q4 GDP is set to remain unchanged at 4.1%. In line with other regional manufacturing surveys, the market expects the Kansas City Fed Index will continue to advance (market f/c: 16). The FOMC’s Williams (20:30 AEDT), Fed Vice Chair Clarida (01:10), Bostic (03:00) and Evans (04:00) will speak.

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