Daily Market Outlook, March 25, 2021
Asian equity markets are mixed this morning, while futures are lower for Europe but positive for the US, as investors assessed global economic recovery prospects amid rising Covid cases and associated deaths. Ahead of the virtual EU leaders’ summit today, the EU and UK issued a joint statement yesterday that they wanted to “create a win-win situation and expand vaccine supply for all”.
Separately, BoE Chief Economist Andy Haldane last night reiterated his bullish view that the UK economy could see a “rip roaring” recovery if some of the build-up in savings over the past year is spent. Yesterday’s UK ‘flash’ composite PMI for March was surprisingly strong, leaping to 56.5 from 49.6, suggesting considerable momentum heading into Q2.
EU leaders meet remotely today and will discuss the bloc’s response to the pandemic crisis, including speeding up the pace of vaccinations. They will also consider the European Commission’s proposals to tighten controls on vaccine exports, including to the UK. The Eurozone composite PMI yesterday increased to 52.5, the first expansionary (above 50) print since last September. The survey, however, will probably not have captured the most recent extension of lockdown in Germany and new containment measures in parts of France, including the Paris area, to tackle the third wave of infections.
There are a number of central bank speakers today, particularly from the US Federal Reserve and the ECB (see calendar). Fed Chair Powell reiterated that the rise in bond yields in recent weeks reflected a brighter economic outlook and was not a cause for concern. The ECB, in contrast, has pledged to accelerate purchases in the coming quarter at least in order to contain rises in market interest rates.
On the data front later today, the UK CBI March retail survey is released this morning, while official February retail sales are due at 7am tomorrow and are forecast to bounce back strongly after a terrible start to the year. An update of US Q4 GDP is expected to be unrevised at 4.1% (annualised). US initial jobless claims are expected to fall back to reaffirm the recent trend lower amid signs of an improving labour market.
G10 FX Options Expiries for 10AM New York Cut
(Hedging effect can often draw spot toward strikes pre expiry if nearby)
EUR/USD: 1.1700-10 (1.2BLN), 1.1800 (1.5BLN), 1.1900 (610M)
USD/JPY: 108.80 (560M), 109.25-30 (1.5BLN), 109.40-50 (700M)
EUR/GBP: 0.8525 (525M), 0.8550 (800M), 0.8600-15 (1.7BLN), 0.8625-30 (800M)
AUD/NZD: 1.0745 (575M)
USD/CAD: 1.2505 (700M), 1.2550 (500M)
Technical & Trade Views
EURUSD Bias: Bullish above 1.20 bearish below
EURUSD From a technical and trading perspective, the failure to recapture 1.20 on the upside leaves the 1.1830 lows exposed, through here bears will press for a test of the yearly pivot at 1.1720.
Flow reports suggest topside offers weak through to the 1.1940-60 area with stronger offers then increasing through to the 1.2000 level with weak stops through the level and stronger offers into the 1.2050 level. downside bids light through to the 1.1800 area with weak stops through the 1.1780 level before stronger bids appear through the 1.1750 level and increase on a test into the 1.1720 level
GBPUSD Bias: Bullish above 1.3750 bearish below
GBPUSD From a technical and trading perspective, a retest of 1.3750 pivotal trend support has seen fresh demand develop as this level continues to attract support bulls will target a retest of cycle highs en route to 1.44 upside objective. UPDATE... the loss of 1.3750 is a significant bearish development opening a move to test a corrective equality objective 1.3550
Flow reports suggest downside congestion around the 1.3660-40 area with stronger bids on any push towards the 1.3600 level and weak stops likely on a dip through opening to a deeper move, Topside offers through light through to the 1.3800 level with congestion through to the 1.3850 area before opening up to light offers and weak stops through the 1.3900 level and then stronger congestion.
USDJPY Bias: Bullish above 107.30 targeting 109.85
USDJPY From a technical and trading perspective, as 108.30 continues to attract demand bulls will target a test of pivotal 109.85 ahead of the yearly R1 pivot at 110.
Flow reports suggest topside congestion is likely to soak up some of the weak stops above through to the 109.50 area where strong congestion is likely to appear and increasing offers into the 110.00 and like the previous spikes at the beginning of last year any move is likely to find resistance above and continuing through the 110.00 with break out stops likely to be a little more nervous, downside bids light through to the 108.00 level with weak stops on any retrace through the 107.80 level and opening a dip to the 106.00
AUDUSD Bias: Bullish above .7560 bullish targeting .8200
AUDUSD From a technical and trading perspective, as .7820 contains upside attempts there is potential for a head & shoulders pattern to develop, a loss of pivotal .7560 would open a move to test trend support at .7400 next
Flow reports suggest topside offers through to the 0.7700 area with weak stops on a move above the 0.7720 area Then stronger offers through to the 0.7840-60 area and then increasing offers onwards through 0.7900, with the offers likely to continue through to the 0.7950 area and likely increasing resistance through to the 0.8000 levels, downside bids into the 76 cents level with strong bids likely through to the 0.7580 area, weak stops are likely to be few and far between with stronger bids likely into the 0.7550 level and likely stronger congestion through to the 0.7500 area
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 65% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!