Analysis conducted at the close of the US market by Kathy Lien, Managing Director of FX Strategy at BK Asset Management.
He reaches six-month highs
El, hit by falling German bond yields
The strength of the Australian dollar could be a problem for the Reserve Bank of Australia
Canadian dollar resumes its rebound awaiting fourth quarter GDP
The month of March has started with a strong rally in stocks and he has reversed all the losses on Friday. The 10-year US Treasury yield has resumed its rise, with the US dollar reaching its highest level against the Japanese yen in the past six months. However, the gains in the dollar have not been universal, as the improvement in risk interest has led to the rise of the Australian, New Zealand and Canadian dollars against the greenback.
There are many reasons for investors to be bullish this month. Spring is just around the corner and warmer weather will bring restaurants out of hibernation and provide a more conducive environment for al fresco dining. Congress is also expected to pass the $ 1.9 trillion stimulus bill this month. The bill has been approved by the House of Representatives and delivered to the Senate. Everything indicates that the Democrats will have to abandon their fight for a minimum wage of $ 15 in the hope that a deal can be reached. The clock is ticking and millions of Americans are about to lose their additional pandemic unemployment benefits on March 14, so Congress has to pass a deal quickly.
Recent economic reports also show that countries around the world have survived the second wave of the virus better than the first. Despite strict restrictions, the February eurozone and UK manufacturing PMIs were revised up. Both indices are well above the key 50 mark that separates contraction from expansion. The ISM US manufacturing sector index also hit three-year highs last month thanks to a surge in new orders. Demand has been particularly robust in the area of electronics and furniture. With each passing day, more people receive vaccines against COVID-19 and, with the improvement of the weather, travel and spending should be recovering.
He has been the currency that has offered the best performance this Monday and this strength is going to be a problem for the Reserve Bank. The bank surprised the market by announcing purchases of bonds worth 4,000 million Australian dollars. This follows an unscheduled purchase of short-term bonds worth A $ 3 billion on Friday. The central bank is taking strong measures to curb the rise in bond yields. Although everyone has focused on rising US Treasury and German bond rates, the yield on Australian bonds saw a similar rise. At the beginning of February, the yield on Australian 10-year bonds was 1.12% and last Friday it reached highs of 1.91%.
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