Inflation expectations in the US are at their highest levels in 12 years (Bloomberg). This has caused the Treasury yields to keep on ticking higher. Inflation is expected to rise as the Fed has signalled that it will keep the rates low even though the cash balances in the US banking system are about to rise by 60%. The counter-argument to inflation expectation is that inflation can rise only if demand is greater than supply. The corona aid packages globally mean that the supply side didn’t have to adjust strongly which means that the supply is healthy and can meet the demand – even if the vaccinations will bring about relatively normal economic circumstances. By reading further you agree with our disclaimer at the bottom of this page and acknowledge that we do not provide investment advice.
The US retail sales data was quite disappointing yesterday. The core retail sales were down by -2.7% (0.2% expected) while the headline number was even worse -3.0% (-0.5% expected). Oil retraced on news that health authorities in several European countries have stopped using the Astra-Zeneca Covid-19 vaccination. This is believed to slow the demand in Europe. At the same time, however, demand in Asia is growing. Oil traders’ focus today is on the release of Crude inventories but the main event today is obviously the FOMC Press Conference. For more details on macroeconomic releases see our economic calendar.
With an uptrend in the US bond yields, it is challenging for the EURUSD to muster enough bullishness to move higher. We now have a lower high (at 1.1989) below the upward sloping trendline and the pair has been drifting lower for the last three days. In order to negate this bearishness EURUSD would need to break above 1.1989 which could take the pair to 1.2074 – 1.2115 range where we have 50-period SMA and a resistance level from March 3rd. A break below 1.1835 (the most recent reactionary low) would be likely to open a way to 38.2% Fibonacci level at 1.1695. The key support and resistance levels in EURUSD are 1.1835, 1.1989, 1.2113 and 1.2243. Open a VIP Black account with us. There are no per trade execution or monthly fees on our VIP Black accounts.
Recent macroeconomic data releases
- US Average Hourly Earnings 0.2%, 0.2% expected
- US Non-Farm Employment Change 379K, 197K expected
- US Unemployment Rate 6.2%, 6.3% expected
- Canadian Ivey PMI 60.0, 49.2 expected
- Canadian Overnight Rate 0.25%, 0.25% expected
- Crude Oil Inventories 13.8M, 3.0M expected
- US CPI 0.4%, 0.4% expected
- US Core CPI 0.1%, 0.2% expected
- Chinese Industrial production 35.1%, 31.2% expected
- Chinese Retail Sales 33.8%, 32% expected
- US Core Retail Sales -2.7%, 0.2% expected
- US Retail Sales -3.0%, -0.5% expected
Important macroeconomic data releases today
- Canadian CPI 0.7% expected
- US Crude Oil Inventories 2.8M expected
- FOMC Economic Projections
- FOMC Statement
- Federal Funds Rate <0.25% expected
- FOMC Press Conference
- New Zealand GDP 0.2% expected
You may access the times and dates in the economic calendar here.
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Chief Market Analyst
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