What you need to take care of on Monday, March 6:
The Greenback lost ground on Friday and finished the week lower. Positive data from China and a retreat in US yields kept the DXY in negative territory. US Stocks posted weekly gains after sharp losses in February. The improvement in market sentiment contributed to weakening the Dollar, which posted the first weekly loss in a month after a positive February.
It could be a quiet start to a busy week that will bring new information, interest rate decisions and fresh guidance from central banks. The Reserve Bank of Australia will have its meeting on Tuesday (25 bps rate hike expected) and the Bank of Canada on Wednesday; Fed Chair Powell will testify to Congress (Tue/Wed) on the Semiannual Monetary Policy Report. China will report trade (Tuesday) and inflation (Thursday).
The key day will be Friday with the Non-farm payrolls report; Canada will also release employment data. During the weekend, China’s annual “Two Session” (parliamentary meeting) kicks off. The Chinese government is set to formalize government titles and announce its GDP target.
EUR/USD posted a modest weekly gain, enough to become the best performance since early January. The rebound occurred from the 20-week Simple Moving Average and was capped below 1.0700. Eurozone inflation data triggered a decline in European bonds. Rising EZ yields helped the Euro.
The benefit from the agreement between the United Kingdom and the European Union was short-lived for the Pound. GBP/USD continues to move sideways, supported by 1.1900, unable to retake 1.2000. EUR/GBP rebounded back to the 0.8850 area.
The Japanese Yen finished the week mixed despite higher yields. USD/JPY is facing a strong resistance around 137.00. EUR/JPY posted the highest weekly close since November, but it was far from the highs below 145.00.
Among majors, the New Zealand Dollar was the best performer. Back in February, the Reserve Bank of New Zealand raised the OCR by 50 basis points to 4.75%, signalling further hikes ahead. NZD/USD rose after four weekly slides, still unable to rise above the 20-day SMA at 0.6260.
Considering the most traded currencies globally the Chilean Peso (CLP) and the Mexican Peso (MXN) were the week’s biggest gainers. USD/MXN dropped below 18.00 for the first time since 2018.
Yields remain relevant for currencies, with the US 10-year at 4% and the German 10-year at 2.70%, the highest weekly close since 2011. Bond market volatility is expected to continue next week.
Gold had the best week since January, recovering from two-month lows to the $1,850 area despite higher yields. Price rose constantly since Monday. Silver ended a negative six-week streak, climbed from four-month lows, back above the $21.00 area. The outlook for metals has improved with the bond market still representing a critical risk in both directions.
Oil prices finished the week up by around 4%. On Friday prices rose almost 2% after being down 3% on reports that the United Arab Emirates (UAE) is having an internal debate about leaving the Organization of the Petroleum Exporting Countries (OPEC). The latest round of US and Chinese economic activity data helped prices hold above YTD lows but not enough to boost WTI back above $80.00.
Cryptocurrencies failed to benefit from higher equity prices and a weaker Dollar. Bitcoin lost more than 4% on Friday, to the lowest level in four weeks, hit by Silvergate woes.
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