Forex news for New York trade on Monday, March 1, 2021:
- Villeroy: So much as recent yield rise is unwarranted, ECB must react against it
- Fed's Barkin: Driver of higher rates "seems to be" vaccine and economic optimism
- BOE's Ramsden: We want to have tool of negative rates if forecasts don't materialize
- February ISM manufacturing 60.8 vs 58.6 expected
- US January construction spending +1.7% vs +0.7% expected
- ECB PEPP data shows just 12B euros in bond buying
- Fed's Daly says K-shaped recovery is not acceptable
- Goldman Sachs has restarted its crypto trading desk
- US February final Markit manufacturing PMI 58.6 vs 58.5 expected
- Markit February Canada manufacturing PMI 54.8 vs 54.4 prior
- Fed's Brainard: Pandemic showed flaws in financial system
- Canada Q4 current account balance -$7.3B vs -$8.0B expected
- Former French President Sarkozy found guilty of corruption, sentenced to prison
- Germany February preliminary CPI +1.3% vs +1.2% y/y expected
Markets:
- Gold down $12 to $1722
- WTI crude oil down $1.28 to $60.22
- US 10-year yields up 3.4 bps to 1.44%
- S&P 500 up 93 points to 3905
- AUD leads, CHF lags
Welcome to March.
Tone tone is decidedly different in equities even through nothing really changed on the weekend. Especially notable is that nothing changed in the bond market as rates moved up further at the long end in a steepener.
The underlying theme on the day was the divergence between Fed comments and everyone else. The RBA, ECB and BOE all either took action to halt the rise in rates or threatened it. The only meaningful Fed comment was from Barkin, who shrugged off the rise in rates, saying it reflected optimism. He was hardly definitive and there are some Fed heavyweights coming up (including Brainard on Tuesday) so the debate certainly isn't closed but the schism is certainly worth watching.
For all the headlines, the FX market was subdued. The commodity currencies are on track to finish higher but that move came before US trade for the most part.
There was some selling in JPY and CHF in New York trade as the mood improved but it was nothing to write home about. Despite the big move in stocks, the market still doesn't seem like it's made up its mind.
