GBP>EUR – 1.1563
GBP>USD – 1.3998
EUR>USD – 1.2093
GBP>CAD – 1.7633
GBP>AUD – 1.7874
GBP>SEK – 11.701
GBP>AED – 5.1352
GBP>HKD – 10.844
GBP>ZAR – 21.837
GBP>CHF – 1.2799
· USD ADP Employment Change(Feb)
· USD ISM Services PMI(Feb)
- EUR/USD tops 1.21 amid improving market mood
- GBP/USD rises toward 1.40 ahead of UK budget
- UK Final Services PMI revised down to 49.5 in Feb
- Gold Price Analysis: Fitch raises 2021 XAU/USD price forecast from $1400 to $1600
The prevailing lackluster performance of the pound is a correction in an overall upward trend. The Sterling still registers the strongest of the main currencies in the year so far, showing an average gain of over 3% against the dollar, euro, and yen at prevailing levels. The speedy rollout of COVID-19 vaccinations in the UK, alongside the end of what had been long-running Brexit uncertainty, can be attributed to a brightening outlook for the UK economy. As of yesterday, 30.77 per 100 of the population have received at least the first dose of the COVID-19 vaccine. Only Israel and the UAE are ahead globally, while the vaccination count currently stands at about 4 to 5 times more than in most EU nations. The rate of new positive COVID-19 test results in the UK is now less than a 10th of what it was at the peak in early January, while the seven-day moving average of emergency calls with COVID-19-like symptoms is now at the lowest since the pandemic started. Despite this, the UK government is enacting a slow, four-phase reopening process, with the aim of completing the process in mid-June. There remain concerns about new variants of SARS-Cov2, which are more transmissible and more resistant to the existing vaccines, with both the Brazilian and South African variants having been detected on British shores.
The dollar's prevailing bias has switched to softening against a backdrop of buoyant stock markets and steady Treasury yields. The DXY dollar index ebbed to a low for the week at 90.67, correcting gains that yesterday left a one-month high at 91.39, while EUR-USD posted a high for the week at 1.2107, having recouped from yesterday's dabble under 1.2000. Broad weakness in the Japanese currency-maintained buoyancy in USD-JPY, despite the dollar softening against most other currencies, though the pair remained just shy of yesterday's seven-month high at 106.96. Most yen crosses lifted and posted new highs for the week, recovering ground lost during the risk-off positioning bout that was seen in the latter part of last week. AUD-JPY, for instance, pegged a high at 149.42, which is just over 2 big figures up on last Friday's low to narrow the gap to the 34-month peak that was seen in the early part of last week to just over 1 big figure. USD-CAD drifted to an intraday low at 1.2603, which is 5 pips above the low for the week that was seen yesterday. Oil prices eked out a fresh correction low. Front-month WTI crude futures posted a nine-day low at $59.36, surpassing the previous low by just 2 cents, before recouping to near the $60.00 level. The OPEC+ group of oil-producing nations is meeting today and tomorrow, and the consensus expectation is for an easing in supply quotas given the worldwide drop in COVID-19 cases and motoring vaccine rollout, alongside the associated reopening in major economies. Oil prices are amid the most sustained correction since last October. Hedge funds have reportedly turned sellers in recent sessions after being consistent buyers over the prior 15 weeks. Aside from OPEC+ supply, U.S. oil production is ramping higher. Ahead, there is a slew of U.S. data released over the remainder of the week, culminating in the February jobs report on Friday. We expect the data to fit the recent pattern and be prone to beat expectations and show economic recovery, even before the massive fiscal spending program has begun. Accordingly, this could revive Treasury yield gains and lift the dollar.
XE Market Analysis Europe – 03rd March 2021
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