Market Wrap 22nd March 2021
US equities are rising higher on coronavirus vaccine hopes in the news today, whilst the US dollar trades below $92 and lower from the US Open.
AstraZeneca is back in the news but this time it is more good news than bad as the US Food and Drug Administration (FDA) will carefully examine the Oxford AstraZeneca Data, and if they approve of the vaccine, they will distribute the vaccine equitably within the vaccination distribution program.
Feds Barkin was back talking up inflation over the next 3 months just as the Biden administration reported that they are preparing a further $3trn in new spending proposals, starting with a new Infrastructure Bill. The fiscal flows from the US government is putting the likelihood of the total amount of spending to dwarf the $6trn budget of 2020. Whether or not the Republicans allow the debt ceiling to be raised in the summer enough for these new spending proposals could be the next political induced market turmoil moment.
US Existing home sales were down 6.6% in February 2021, showing a decline from the previous month down to 6.22 million units in February, coming in under the marker expectations. This added to the overall mixed tone around the US dollar with the EURUSD and GBPUSD doing their best to gains some ground against the Greenback.
The trading sentiment on the ActivTrader platform is saying that 68% of traders are bearish the EURUSD even though we are at a confluence of support. On the daily EURUSD chart price is currently at previous resistance acting as support, the 200 ema which is acting as support, and the 61.8% fib retracement.
The USDJPY hasn’t taken out Friday's low having previously traded above Friday's high, so there is still a chance we end the day lower and if we do, that would be a bearish engulfing candle. 108.580 is currently acting as support and with the move towards safe havens like the Swissy and yen we could get a further sell-off from these extended highs back towards the 200 daily periods EMA.
Oil prices struggled to fully recover on Monday but managed a positive 0.5% gain following on from the weekly selloff the previous week. WTI crude traded around $61.9 and Brent about $64.9 a barrel, as the increase in COVID-19 cases across Europe signaled the end of the demand in the Euro area. Germany is looking likely to follow France in extending lockdown in a bid to contain the infections, and the UK is looking quite likely to end the movement of people across the borders from the eurozone according to reports from the UK health ministry.
China is taking delivery of a monthly record amount of North Sea crude oil which will hopefully offset the decrease in demand from Europe but even the Chinese won’t be able to maintain the recovery in demand from April as their refineries will go into maintenance. Currently, the trader's sentiment shows that 82% of traders are looking for higher prices still and from my perspective, whilst we trade above 58.50-58.80 I tend to agree.