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Intermarket:
- SP Futures 3850 (+0.42%)
- EUSTXX 3603 (+0.42%)
- Crude Oil 52.40 (+0.24%)
- US 10YR 1.101 (+0.91%)
- EurUsd 1.2174 (+0.03%)
- UsdJpy 103.70 (-0.01%)
- DAX 13910 (+0.46%)
Risk assets are trading slightly higher into the week, while the US Dollar is weaker vs the majors, especially sterling. The bulk of press attention over weekend focused on slower vaccine rollouts across US and EU, leading to concerns about slower global growth momentum vs previously anticipated. Lockdowns continue in the UK and Europe.
Markets will now follow the vaccine delay story and also the virus “mutations” until covid has been largely eradicated. Signs that the covid-war is being won will likely be seen in equities, with a rotation out of tech and back into the real economy. But nothing of the kind is happening yet.
Looking ahead: today we get the German IFO reading. Later this week the FOMC decision on Wednesday is expected to be a highlight, with focus on inflation readings and tapering. Wednesday is a blockbuster day with Apple, Tesla and Facebook reporting to add to the fun. The Italian government has a Senate vote this week (likely Wednesday or Thursday) on the annual report of its justice minister. PM Conte may very well resign if he loses. Full rundown in our Weekly Call.
Matters that Matter:
• ‘We can’t wait:’ Biden administration fights for $1.9 trillion COVID-19 relief plan
• White House: President Biden to speak at 3.45 pm ET Monday on manufacturing
• Global chip shortage hits China’s bitcoin mining sector
• China’s daily COVID cases rise, driven by previously asymptomatic patients
• China-Taiwan tensions rise days into Biden presidency
• Australia approves Pfizer vaccine, warns of limited global AstraZeneca supply
• UK Gov has quietly extended lockdown laws to give councils the power to close pubs, restaurants, shops and public spaces until July 17 this year.
• UK facing constitutional crisis: new polls reveal a majority of voters in Scotland and Northern Ireland want referendums on the break-up of Britain.
Majors Weekly View:
USDJPY
- Prices closed little changed for the 2nd week in a row on Friday, highlighting investor indecision. Signals are mixed and we suggest remaining square in between 103.22/104.40.
- Retracement in US yields losing steam, but USD weakness still in play.
- Offers ahead of 104.00
EURUSD
• Prices posted an “inside week” into Friday’s close, highlighting a weak positive sentiment. Until 1.2231 is broken, the bias remains just cautiously bullish this week.
• EUR heavy on the crosses into the week.
• ECB speak eyed today.
AUDUSD
• Prices posted 3rd little changed close at the weekly level into Friday, highlighting investor indecision. As such, until .7660/.7820 is broken, we suggest remaining square.
• Aud recovering lost ground as risk appetite firm.
• Offers ahead of .7800, bids reported at .7700 but main support .7660.
GBPUSD
• Buyers returned to the market last week, maintaining signals cautiously bullish for this week.
• Pound remains resilient across the board.
• Resistance atop 1.3700 is 1.3750 and then 1.3800.
FX Relative ATR Grid
Comment: Volatility has declined once again last week, which is the 2nd week in a row and highlights a lack of interest at current prices. Caution is advised, volatility expansion is expected.