Forex news from the European trading session - 3 March 2021
Headlines:
- US MBA mortgage applications w.e. 26 February +0.5% vs -11.4% prior
- ECB's Weidmann: ECB can flexibly adjust pace of PEPP purchases if needed
- ECB reportedly said to see no need for drastic action to combat rising bond yields
- UK February final services PMI 49.5 vs 49.7 prelim
- Japanese government set to extend Tokyo state of emergency until 21 March
- Several OPEC+ members reportedly support the idea of keeping output unchanged
- Eurozone February final services PMI 45.7 vs 44.7 prelim
- Switzerland February CPI -0.5% vs -0.3% y/y expected
- BOJ's Kataoka: BOJ must respond flexibly if Japanese yields keep rising
- Germany reports 9,019 new coronavirus cases, 418 deaths in latest update today
Markets:
- CAD leads, CHF lags on the day
- European equities higher; E-minis up 0.6%
- US 10-year yields up 5.2 bps to 1.443%
- Gold down 0.7% to $1,725.50
- WTI up 1.5% to $60.65
- Bitcoin up 9% to $51,680
It was a relatively quiet session as the market continues to flip back and forth on the week, with equities pushing higher again today after the drop yesterday.
European stocks kept a more positive mood overall with the DAX testing record highs since the open as it holds on to gains despite a report suggesting the ECB may stick to verbal intervention and tout PEPP flexibility to curb the rise in bond yields.
The report did however keep bond sellers interested as European yields ticked a little higher while 10-year Treasury yields are near the highs for the week, contesting the key threshold of 1.45% - which has served to cap the rise in yields in recent sessions.
US futures were marked higher early on but have seen gains trimmed as yields are looking jumpy ahead of North American trading.
Nasdaq futures were up by 1% earlier but is now up 0.6% while S&P 500 futures are maintaining modest gains of around 0.6% as well.
In FX, ranges were narrow early on but the dollar managed to flex some gains in the past few hours after having eased slightly at the start of the session.
EUR/USD fell from 1.2110 to 1.2058 and is keeping at the lows while USD/JPY is holding around 106.90-00 as buyers look to contest the 107.00 handle.
GBP/USD also saw a drop from 1.4000 to 1.3950 before keeping around 1.3960 levels now ahead of UK finance minister Sunak's budget announcement.
The loonie is also slightly underpinned amid a push higher in oil prices back above $60 after a report hinted that all options are on the table ahead of the OPEC+ meeting, including leaving production quotas unchanged going into April.
All eyes are still on bonds but despite the ECB confusion earlier, we may yet have to wait on Fed chair Powell's speech before any firm commitment by the market.
