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RBA GOV LOWE SPEAKS, HOW TO TRADE AUDUSD

15 Mar 2021

The governor of the Reserve Bank of Australia, Philip Lowe, said on Monday that the central bank is doing all it can to help the country of economic recovery from the coronavirus pandemic and that policy settings will remain unchanged until jobs and inflation targets are met."Both of us face major challenges," Lowe said in a speech in Melbourne.At the Reserve Bank, we are working to help the economy rebound and strengthen the labor market while staying on track to meet the inflation target."The Reserve Bank of Australia recently maintained its cash rate at a record low of 0.1 percent, reaffirmed its three-year yield goal, and provided forward guidance that has been priced into the currency.These additional comments elicited no response from the sector.

ZEW ECONOMIC SENTIMENT, HOW TO TRADE EURUSD

16 MAR 2021

The yield on the benchmark 10-year US government bond fell from its highest level in more than a year as investors hoped the Federal Reserve would move to slow the recent sharp increase in long-term borrowing costs.As a result, the market of attention will be drawn to the outcome of a two-day FOMC policy meeting that begins on Tuesday.Investors will also choose to avoid placing aggressive bets in the run-up to this week of main central bank event risk, preferring to sit on the sidelines. In the absence of appropriate economic data from the Eurozone, it is wise to wait for some solid follow-through buying before preparing for some significant intraday appreciating step.Meanwhile, later in the early North American session, the US economic docket highlights the publication of monthly Retail Sales figures.The USD market dynamics may be affected by this, as well as US bond yields.Traders can also use the wider market risk sentiment to pick up some short-term opportunities in the EUR/USD pair.

US RETAIL SALES [Forecast: -0.5%, Previous: 5.3%]

16 MAR 2021

Despite the government of dismal initial estimates of just 49,000 new hires, did Americans sense the labor market was heating up in January?Is that a better reason for the 5.3 percent rise in Retail Revenue and the 6% increase in the Control Category than the $600 pandemic stipend paid out in December?The sales success was not a one-time occurrence.With the exception of the lockdown recovery months of May(18.3%) and June(8.6%), the January spending surge was the second highest in a decade.Only the 6.7 percent rise in October2001, when the US was coming out of a brief recession, was higher.Retail sales are expected to drop 0.5 percent in February, compared to 5.3 percent in January.Sales in the Control Group are expected to fall 1.1 percent from6%, while Sales ex Cars are expected to fall 0.1 percent from 5.9%.These declines are based on the assumption that the relatively small stimulus payment that arrived in December provided the impetus for the January sales surge.Analysts believe that with no stimulus payments in February, US customers would remain at home.Consumer spending forecasts for January were also woefully understated.Overall sales were expected to increase by 1.1 percent, but they increased by 5.3 percent; sales except cars were expected to increase by1%, but they increased by 5.9 percent, and the Control Group, which mimics the consumption portion of GDP, increased by 6% on a 0.8 percent estimate.

BOJ MONETARY POLICY STATEMENT

19 MAR 2021

At the end of its two-day March monetary policy review meeting on Friday, the Bank of Japan (BOJ) left its main policy rate unchanged.The Bank of Japan kept its main rate at -10 basis points while continuing to buy J-REITS at a rate of up to JPY180 billion per year.In a policy statement, the BOJ explained that the 10-year JGB yield may shift up or down 0.25 percent (not 0.2 percent) around its 0% goal.Markets expected the Bank of Japan to allow longer-term bond yields to fluctuate more around its target while also hinting at a "stealth" tapering of its large exchange-traded fund purchases (ETF).

GBP CLAIMANT COUNT CHANGE

23 MAR 2021

The Office for National Statistics (ONS) in the United Kingdom will issue the February month Claimant Count figures, as well as the Unemployment Rate in the three months to November January, at 07:00 AM GMT on Tuesday.Although the UK recent unlock announcement has GBP/USD traders optimistic, fears of reflation would require a strong battle from the main jobs report to bring back cable buyers.The average weekly earnings, including bonuses, are expected to rise from 4.7 percent to 4.9 percent in the three months to January, according to the UK labour market survey, while salaries ex-bonuses are expected to rise from 4.1 percent to 4.4 percent.Furthermore, the ILO Unemployment Rate casts doubt on the employment data of upbeat signals, with projections indicating an increase to 5.2 percent from 5.1 percent in the three months ending in February.The Claimant Count Change numbers, which fell to -20K in the most recent release, may also be on the same side.In deviations up to + or-2, the reaction is likely to remain confined around 20 pips, but in some cases, if significant enough, a deviation may fuel movements over 60-70 pips.GBP/USD is currently trading at1.3825, down 0.22 percent intraday, and is down for the fourth day in a row ahead of results, namely Tuesday of London open.While jitters between the EU and the UK over the coronavirus vaccine are largely to blame for the cable of recent weakness, traders are concerned that the UK of unlock steps will be challenged again, so today of data will be key to watch. Andrew Bailey, the Governor of the Bank of England, hopes for a quicker economic recovery in the UK, but his colleagues are divided, so any disappointment in today of jobs figures could spread economic concerns and weigh on the GBP/USD exchange rate.It of worth remembering that the UK debt is now at a multi-year high of 95% of GDP, posing a challenge to more easy money policies and casting doubt on sterling of prospects, even though the BOE remains ready to shore up the markets if necessary.

EUROZONE PMI’S RELEASES:

24 MAR 20211.jpg

The pair appears to have entered a bearish consolidation phase following the previous day of sharp drop of nearly 100 pips, as investors await fresh catalyst from Wednesday of flash Eurozone PMIs.However, the underlying backdrop continues to favour bearish traders and supports the possibility of further weakness.The upbeat US economic outlook, bolstered by the impressive pace of COVID-19 vaccinations and the passage of a large stimulus package, continued to support the US dollar.Aside from that, the current risk-off mood aided the greenback of safe-haven status and limited the upside potential for the EUR/USD pair.After Western nations imposed sanctions on Chinese officials for human rights abuses in Xinjiang, global risk sentiment took a hit.The flight to safety accelerated after Treasury Secretary Janet Yellen stated that tax hikes would be required to fund infrastructure projects and other government investments.This, combined with easing inflation concerns, acted as a headwind for US bond yields, though it had little effect on the USD of bullish sentiment.In testimony before the House Financial Services Committee on Tuesday, Fed Chair Jerome Powell downplayed the risks that economic growth would lead to unwelcome inflation. On the other hand, increasing market fears about the third wave of COVID-19 infections, pandemic-related lockdowns, and Europe of slow vaccine rollouts weighed on the shared currency.Lockdown measures have been extended or reintroduced in many European countries in an effort to stem the rise in cases, which has been fueled by more infectious new variants.The indefinite lockdown is predicted to have stymied the Eurozone of dominant services sector of recovery, making Tuesday of release of Services PMIs all the more important.Weaker readings will add to the storey of the region of uneven economic recovery, putting the EUR/USD pair at risk of further weakness.

EUROZONE SERVICES PMIs

07 APR 2021

The latest services numbers in Spain and Italy are expected to remain subdued, with operation remaining below50, although marginally improved from February, at 45.6 and 49.2 respectively.The vaccine program of slow rollout across Europe, especially in France and Germany, is stifling economic activity in Europe of two largest economies, with last month of flash PMIs indicating only a small improvement from February of extremely low figures.From 43.6 to47.8, France is expected to improve, while Germany is expected to improve from 45.7 to 50.8.If these figures are confirmed, it will reaffirm the continued gap between the services and manufacturing industries, both of which continue to outperform the economy.With restaurants and bars in France expected to stay closed for another four weeks, and Germany still under various constraints, it of difficult to see any kind of decent recovery in April.With such a backdrop, there is a very real possibility that Europe of tourism industry will face yet another desperate summer season.Despite the optimistic vaccine news raising the mood in the markets, the numerous delays in the vaccine rollout mean that there will be no substantial increase in economic activity until regulations are relaxed, which may happen as early as late spring.

US UNEMPLOYMENT CLAIMS

08 APR 2021

Despite the fact that the American job market went into overdrive in March, providing more new people with daily paychecks than at any point since August, three times as many people applied for unemployment benefits as the fallout from the pandemic lockdowns continues to upend lives.Initial jobless claims are expected to fall to 680,000 in the week of April 2 from 719,000 the week before.Continuing Claims are forecast to drop to 3.65 million from 3.794 million in the week ending March 26.Employers hired 916,000 people in March, nearly double the 468,000 who were hired in February and much more than the 647,000 anticipated.The totals for the first two months of the year were revised up by156,000, taking the quarter of total to 1.617 million.Businesses, like their clients and staff, are upbeat.The Institute for Supply Management of Manufacturing Purchasing Managers Index (PMI) rose to 64.7 in March, the highest level in 38 years.With a score of63.7, the Services PMI was the highest in the series history.Jobs is the most critical factor in consumer confidence, and March statistics from the Conference Board and the University of Michigan show that hiring is booming.The Consumer Confidence Index of the Conference Board (CB) increased to 109.7 in March, up from 91.3 in February.The overall consensus was 96.9%.In March, consumer confidence reached its highest level since the outbreak, falling roughly halfway between the February 2020 score of 132.6 and the April panic low of 85.7.

CAD EMPLOYMENT CHANGE AND UNEMPLOYMENT RATE

09 APR 2021

Statistics Canada Job Shift is a measure of the change in the number of people living in Canada. A increase in this measure, in general, has positive consequences for consumer spending, which boosts economic growth.As a consequence, a high reading for the CAD is considered positive or bullish, whereas a low reading is considered negative or bearish.
Statistics Canada Unemployment Rate is calculated by dividing the number of unemployed jobs by the total civilian labour force. It is a leading economic measure for Canada.If the rate is increasing, it means that the Canadian labour market is not expanding.As a result, an increase causes the Canadian economy to decline. A decrease in the figure is generally considered positive (or bullish) for the CAD, while a rise is considered negative (or bearish).
After a gain of 259,200 workers in February, Canada is forecast to add 100,000 jobs in March.The following are economists and analyst predictions for the forthcoming job data from major banks.The USD/CAD has been trading below 1.26 ahead of the publication at 12:30 GMT, and gasoline prices have remained steady.As virus containment measures eased, we expect next week of labour market report to show solid job growth (+150K) in March.The hospitality sector is significantly over-represented in the remaining economic downturn – accounting for 80% of the shortfall in total hours worked compared to pre-shock (February2020) levels –and it of also where we expect to see more job growth in March as limits on items like restaurant dining (at least on outdoor patios) are eased.