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Currency markets seek direction
Currency markets content to watch from the sidelines
Currency markets have moved into range-trading mode ahead of tonight’s US data, with US bond yields almost unchanged overnight, and no direction to be gleaned from equity markets either. The dollar index eased slightly by 0.11% overnight but has risen 0.12% to 92.25 this morning, leaving us where we started yesterday.
Unsurprisingly, that has left developed market currencies almost unchanged as well, with EUR/USD steady at 1.1890, GBP/USD at 1.3735, and USD/JPY at 109.65. Key levels remain for EUR/USD at 1.1700 and 1.1925, 1.3675 and 1.3780 for GBP/USD, and 109.00 and 110.00 for USD/JPY.
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The WPI spike:
India s Wholesale Price Index has risen for the second consecutive month in February. Wholesale prices touched a 27-month high to 4.17%, a 100% rise from 2.03% in January.
Manufactured products have seen the biggest inflationary pressure as they rose by 5.81%. The rate of wholesale inflation of fuel and power was at 0.58% as against -4.71% in January. It has also impacted the prices of essentials like vegetables, especially onions with 31.28% inflation. Overall food articles saw 1.36% inflation in February.
The wholesale price index is directly reflecting the volatility in the global commodity prices. This is bound to hit the margins of the companies during the ongoing quarter. And, it is going to be a big factor impacting corporate earnings.
Inflation nerves return
US yields rise, boost dollar
The inflation genie I mentioned on Friday found life rather uncomfortable in its bottle, it appears, as US yields shot higher on Friday. Notably, the long end of the curve steepened markedly, and for all the noise surrounding the rise in 10-year yields, the 30-years was where the real action was.
That was enough to unwind the intra-day rallies on Wall Street, with the rotation into cyclicals at the expense of technology very much in evidence again. That left the Dow Jones higher, the Nasdaq stretchered of injured once again, and the S&P 500 left somewhere in the middle.
Inflation genie returned to its bottle
March 12, 2021SharePrint
The buy-everything animal spirits refused to be caged any longer overnight as financial markets returned the inflation genie to its bottle. Technology was back, the S&P 500 and Dow Jones closed at record highs, US yields held steady, bitcoin rose, and the US dollar fell, with markets partying like it was 2020.
ECB to accelerate pace of bond purchases
Earlier in the evening, the European Central Bank remained unchanged and signalled it would accelerate the pace of QE buying to cap yields. The euro gained a pass mark, it seemed, because the ECB did not increase the size of the QE programme; instead, they chose to front-load it.