Stock markets moved broadly higher after a positive close on Wall Street yesterday. Concern over volatility in retail trading started to recede and stimulus hopes and vaccine progress is keeping sentiment underpinned. Tech stocks outperformed ahead of earnings from the like of Amazon and Alphabet today. GER30 and UK100 futures are currently up 0.4% and 0.6% respectively U.S. futures are also higher, with the tech-heavy USA100 outperforming. The JPN225 closed with a gain of 0.97%. The 10-year Treasury yield is up 0.3 bp at 1.08%, while Australian 10-year rates climbed 0.5 bp even as the RBA announced an extension of asset purchases worth an additional AUD 100 bln. The Dollar was on bid overall on Monday, with a new month reportedly seeing USD inflows, despite the general risk-on conditions seen on Monday, which typically weighs on the USD.

Headlines:

• For Europe it is clear that vaccination programs won’t bring a quick re-opening of economies, even in the UK.
• US records deadliest month of the pandemic.
• RBA left key rates unchanged, as expected, with the target of 10 basis points for the cash rate on the yield on the 3-year Australian Government bond maintained.
• US-China: China calls for the relationship with the US to be put back on a predictable and constructive track
• Biden had a “substantive and productive discussion” with Republican senators on covid relief.
• South Korea is preparing a fourth round of coronavirus cash handouts.
• CME futures exchange has raised the margin on silver futures by 18%
• Robinhood, the online broker at the centre of the boom in day trading, has raised $2.4bn in its second capital infusion in a week to shore up finances strained by turbulent trading
• Japanese government said it would extend Covid related lockdowns and restrictions in various areas of the country for an additional month to March 7, appeared to have weighed on the Yen as well.
• Traders continue to price out any hope of additional rate cuts from BoE and ECB and data releases today are likely to be bond negative, with preliminary GDP numbers for the Eurozone and French HICP inflation likely to come in higher than originally anticipated

Forex Market

EUR –  is trading at 1.2071, bellow PP and a breath above 2 month Support at 1.2000
GBP– dollar safe haven strength drift pound to 1.3600 territory. Currently close to PP at 1.3690
JPY –  Resistance is at the psych 105.00 level, with buy-stops noted above the level. A break higher will see the 200-day moving average at 105. 63 as the next upside target. The pairing last trade above the 200-DMA in June of 2020. Currently  below R3 at 104.97
AUD – ranging between the PP and S1  (0.7600-0.7665)
CAD –  at 1.28 from 1.2860 highs.
Silver – in retreat, falls by 4% back below $28 – CME has raised margin on silver futures and that is arguably a significant factor in driving prices lower today.
USOil – surged to 54.35

Today: Today focus mainly on GDP reading for the Eurozone, and the Labor data for New Zealand . Opec meeting on tab as well.

Biggest Mover AUDCAD ( 0.32% as of 08:00 GMT) – The Australian dollar ebbed after the RBA left interest rates unchanged but extended its QE program following its February board meeting. Governor Lowe also noted in the central bank’s statement that the exchange rate “has appreciated and is in the upper range of the recent year.” AUDUSD edged out a five-day low at 0.7603.

RBA left key rates unchanged, as expected, with the target of 10 basis points for the cash rate on the yield on the 3-year Australian Government bond maintained. The parameters of the Term Funding Facility were also confirmed, but the RBA decided to purchase an additional AUD 100 bln of bonds issued by the government, states and territories “when the current bond purchase program is completed in mid April. These additional purchases will be at the current rate of AUD 5 bln a week”. The statement said the outlook for the global economy has improved over recent months thanks to vaccine developments. It warned, however, that the expected recovery is likely to “remain bumpy and uneven” and “remains dependent on the health situation and on significant fiscal and monetary support”. The central scenario is for the Australian economy to expand 3 1/2 percent this year as well as expected and “return to its end-2019 level by the middle of this year”. Spare capacity is likely to stay for some time. Inflation and wages growth are expected to pick up from weak levels, but to remain “below 2% over the next couple of years”.

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Andria Pichidi

Market Analyst

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