26th March 2021 - US equities stage impressive mid-session recovery

Good Morning,

Market Headlines

There was only modest movement among the major asset classes. The S&P500 is currently up 0.3%, and bond yields are little changed, although the US dollar did rise further to a five-month high. Commodities, Brent crude oil futures fell 3.7% to $62.10, copper fell 1.8%, iron ore fell 0.4% to $159.90, and gold fell 0.4%.

Overnight Currency Ranges

AUD/USD 0.7564 0.7614 (3 month low)

EUR/USD 1.1762 1.1827 (5 month low)

GBP/USD 1.3671 1.3745

USD/JPY 108.73 109.23

NZD/USD 0.6944 0.6985 (4 month low)

USD/CAD 1.2564 1.2630

USD/CNH 6.5258 6.5533

AUD/JPY 82.44 83.06

AUD/NZD 1.0882 1.0903

AUD Thoughts

Another quiet day to round out the week with market volatility expected to drive by the energy and interest rate prices rather than data releases. As was the case in January, the US PCE core deflator for February may again come in slightly firmer than that suggested by the core CPI due to a strong reading in the medical care services component.

AUD/USD continues to make new lows albeit marginally. Demand is expected at 0.7560 and again at 0.7500 while offering interest remains thick all the way up to 0.7750.

Event Risk Data Today

NZ: The Q1 Westpac McDermott Miller Employment Confidence index will be released; we saw a strong rise last quarter as the availability of jobs picked up.

Germany: The March IFO business climate survey has recently held a notch below pre-COVID levels; upcoming releases will be tested by the extension of lockdowns (market f/c: 93.2).

UK: The market expects that February retail sales will rebound from the slump in January caused by the third lockdown.

US: Wholesale inventories are likely to lend support for growth as the economy accelerates (market f/c: 0.8%). February personal income is set to unwind much of last month’s rise (f/c: -7.2%) and weather conditions will be a damper for personal spending (f/c:-0.8%). The market is looking for the February core PCE deflator to print at a soft 0.1%, for a 1.5% annual pace, with a transitory pick up on the horizon.