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Market Wrap

The scheduled news today was light, but we had the US sales of new US single-family homes which followed the recent trend of printing lower. In February US new home sales dropped to a seasonally adjusted annual rate of 775 thousand. Today’s reading was the lowest in 9 months with the really cold weather snap that brought even Houston to a standstill, being a major contributing factor.

Equities and risk assets traded around their VWAPs today while we first waited and then listened in on the Fed speakers. Today we had the Federal Reserve Bank and the US Treasury dept speak together. Fed Chair Powell and Treasury Secretary Yellen's discussed the CARES Act before Congress, and as their opening statements hit the news desks the Nasdaq came off today’s highs.

Fed Chair Powell hasn’t deviated from his sentiment towards the economy or the Fed’s monetary policy. However, we did hear from Fed’s Kaplan who is a non-voter but a hawkish yield advocate. His remarks were that the first step for the Fed to withdraw their accommodative monetary policy would be to reduce the asset purchases and that he can envisage 2.25%-2.5% inflation in 2021. Yellen noted that 10 million jobs are still missing from its pre-pandemic peak but there are some signs of economic recovery.

Oil prices dropped around 5% today, continuing last week’s bearish move as the dollar continues to hold its ground. There are increasing concerns that the global recovery will be put on hold as the new variants of COVID-19 continue to disrupt the European countries and China and that fuel demand would reduce as lockdown measures are being extended.

USDCAD is making the most of the stronger US dollar weaker risk assets and is currently trading around the 1.2550-1.2560 zone, which is up 0.35% today.

Commodity pairs like the New Zealand dollar have had a terrible day which started in the overnight session and hasn’t let up into the London close. The pair is down 2.0% today and the break of the 0.7100 is a break of significant support. The next decent structure is down towards the 0.6800-0.65500 zone and there is a case for a completing Head and Shoulders pattern on the chart. Which if it were to do a x2 measured move lower, would have the NZDUSD targeting the 0.6400 price level. The Aussie has yet to break some significant market structure, but it is down 1.0% today and looking very bearish too.

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