31st March 2021 - Treasury yields soar, dollar runs alongside

Good Morning,

Market Headlines

US Dollar surged against all of its major rivals, once again led by US Treasury yields. That on the 10-year note hit 1.77% its highest since January 2020. The dollar was also supported by upbeat local consumer confidence, retaining its strength throughout the American session despite yields retreated and US indexes traded with a sour tone.

Markets await US President Joe Biden’s speech this Wednesday. He is expected to announce an up to $3 trillion infrastructure investment program, which may also include taxes hikes. Hopes are that his announcement will boost an economic comeback in the country.

Gold prices tumbled, with the bright metal setting at $1,683 a troy ounce. Crude oil prices fell, weighed by equities, with WTI finishing the day at around $60.40 a troy ounce.

Overnight Currency Ranges

AUD/USD 0.7585 0.7664

EUR/USD 1.1711 1.1777

GBP/USD 1.3706 1.3783

USD/JPY 109.75 110.42

NZD/USD 0.6974 0.7033

USD/CAD 1.2581 1.2647

USD/CNH 6.5670 6.5836

AUD/JPY 83.71 84.28

AUD/NZD 1.0876 1.0903

AUD Thoughts

Busy day ahead beginning locally with several second-tier economic data points will be released. Private-sector credit growth is likely to have remained moderate in February, but we will be watching if investor housing credit growth is starting to show further signs of life. Staying with the property sector, building approvals for February are also due, which should reveal a further pull-back in detached home approvals based on the plunge in new home sales in early 2021 following the tapering of the HomeBuilder grant.

China’s PMIs are set to follow both the manufacturing and the services PMIs disappointed in February, but the weakness was mainly due to the Chinese New Year holiday and the modest COVID outbreak. Now with the virus under control and post-CNY seasonality, the PMIs could rebound, perhaps even strongly in March.

AUD/USD traded poorly overnight but demand around 0.7550 is expected to slow any further weakness into the Easter long weekend and quarter-end. Offering interest remains thick and can be staggered all the way to 0.7750.

Event Risk Data Today

New Zealand – March ANZ Business Confidence

Australia February Building Approvals m/m

Australia – February Private Sector Credit m/m

Australia – February Private Sector Houses m/m

Australia – March Manufacturing and Non-Manufacturing PMI

Australia – March CPI y/y

Germany – March Unemployment Change (000’s)

Euro Zone – March CPI m/m

Canada – January GDP m/m

United States – March ADP Employment Change

United States – March MNI Chicago PMI

United States – February Pending Home Sales m/m

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