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11 March 21
Bond auction triggers relief rally, stimulus passes, focus shifts to ECB
Markets are benefiting from a calm US bond auction and the passage of the stimulus. The last offering of debt and jobless claims are eyed stateside while the ECB’s decision is critical for the euro. Gold and Bitcoin are holding onto high ground.
Yields: Returns on US debt remain the primary driver of the market mood. Wednesday’s ten-year bond auction saw enough demand to push yields lower and the dollar down with it. The upbeat market mood has been carried into Thursday’s trade. Another offering is due on Thursday, this time of 30-year Treasuries, linked to mortgages.
Inflation: The Core Consumer Price Index rose by only 1.3% in February, below estimates. It also contributed to calm ahead of next month’s inflation report, which will likely be higher due to base effects. Thursday’s economic calendar features weekly jobless claims, which have likely declined.
Stimulus: The US House of Representatives passed the $1.9 trillion covid relief package, which President Joe Biden is set to sign on Friday. The legislation passed on strict party lines, yet the administration is already contemplating an even bigger infrastructure bill, reportedly worth as much as $2.5 trillion.
Gold XAU/USD has been on the rise, changing hands above $1,730 amid the drop in yields.
The European Central Bank is set to leave its policy unchanged and publish new forecasts in its meeting on Thursday. The ECB is grappling with rising returns on European debt, which somewhat contrasts the old continent’s sluggish growth prospects. Investors will eye changes to the bank’s bond-buying scheme.
WTI Crude Oil is trading above $64 despite a significant buildup in inventories. USD/CAD is changing hands above 1.26, but below the highs after the Bank of Canada left its rates unchanged and refrained from hinting at policy changes.
EUR/USD, “Euro vs US Dollar”
After finishing the ascending wave at 1.1928, EURUSD is forming a narrow consolidation range around this level. Possibly, the pair may break the range to the upside and form one more ascending wave with the short-term target at 1.1980.
GBP/USD, “Great Britain Pound vs US Dollar”
After completing the ascending wave at 1.3918 along with the correction towards 1.3848, GBPUSD is growing to break 1.4000. Later, the market may continue trading upwards with the short-term target at 1.4123.
USD/JPY, “US Dollar vs Japanese Yen”
USDJPY is still falling towards 108.27. After that, the instrument may break this level to the downside and continue trading downwards with the short-term target at 107.70.
USD/CHF, “US Dollar vs Swiss Franc”
USDCHF has completed the correctional structure towards 0.9322; right now, it is forming another descending wave with the short-term target at 0.9191.
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