IFX Market Report: Tuesday 2nd March 2021

The Pound remained relatively steady against the Euro in yesterdays session but depreciated against a stronger U.S. Dollar. Since the start of 2021 Dollar-weakness has been a dominant theme in markets, but the latter half of last week countered that trend. Helping the Dollar at the weekend was the announcement that President Joe Biden’s COVID-19 relief bill passed through the Senate. On Monday, the 10-year US treasury yield “pulled back from its highs of last week, when it briefly topped 1.6% and spent significant time above 1.5%... while yields are still low relative to history, the rapid increase” has led investors to have a short-term bullish outlook of the Greenback.

GBPUSD made a sluggish start to the week as it opened at 1.3962. After coming under significant pressure in the session, the pair closed below the 1.3950 mark at 1.3938.

GBPEUR in contrast was able to maintain its form, opening at 1.1562 and closing at 1.1566. The Euro continues its bad run of form as investors fear that the ECB will follow through with their suggestions to act aggressively to counter an unwanted rise in bond yields. If the central bank chooses to alter their current bond-buying programme, we will likely see increased price action for Euro pairs.

EURUSD was at a loss on the first day of March. The pair started the session at 1.2076 and closed at 1.2049. While the pair was able to make some gains just before the close, in the late afternoon EURUSD fell to a fresh 2 week low of 1.2027 as Dollar appetite increased.

Yesterday we also had PMI data released. The Eurozone manufacturing PMI’s came out at 57.9 vs the 57.7 forecasted. The official report noted that the data pointed “to the quickest expansion in the eurozone manufacturing sector for three years in February”. The US Markit Manufacturing PMI came in as expected at 58.6, and the Official ISM Index was able to jump to 60.8, beating forecasts. February’s Manufacturing PMI figure for the UK also came out better than predicted, printing 55.1 vs 54.9. UK Mortgage Approvals and Lending figures for January also came out better than forecasted at 99K and £5.2B.

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