According to the report from European Central Bank, the current account of the euro area recorded a surplus of €26 billion in February 2021, decreasing by €9 billion from the previous month. Surpluses were recorded for goods (€32 billion) and services (€11 billion). These were partly offset by deficits for secondary income (€16 billion) and primary income (€2 billion).
In the 12 months to February 2021, the current account recorded a surplus of €259 billion (2.3% of euro area GDP), compared with a surplus of €263 billion (2.2% of euro area GDP) in the 12 months to February 2020. This decline was driven by a reduction in the surplus for primary income (down from €48 billion to €18 billion) and an increase in the deficit for secondary income (up from €151 billion to €167 billion). These developments were partly offset by larger surpluses for services (up from €36 billion to €58 billion) and for goods (up from €330 billion to €350 billion).
In financial account, euro area residents’ net acquisitions of foreign portfolio investment securities totalled €804 billion and non-residents’ net sales of euro area portfolio investment securities totalled €21 billion in 12 months to February 2021
FXStreet reports that FX Strategists at UOB Group noted further gains are expected in EUR/USD once the 1.2000/10 band is cleared.
Next 1-3 weeks: “Our latest narrative was from last Thursday where we highlighted that ‘overbought shorter-term conditions could slow the pace of advance but a break of 1.2010 would not be surprising’. However, 1.2010 remains intact as EUR struggled to move above 1.2000 for the past couple of days. Conditions remain overbought and upward momentum is beginning to wane. Unless EUR breaks clearly above 1.2000/1.2010 within these couple of days, the chance or further EUR strength would diminish quickly. Conversely, a breach of 1.1915 (no change in ‘strong support’ level) would indicate that the EUR strength that started about 2 weeks ago has come to an end.”
FXStreet reports that economists at Capital Economics doubt the renminbi’s recent rebound against the US dollar will continue.
“In the US, we expect rapid growth thanks to the economy reopening and large fiscal stimulus. By contrast, China’s economic recovery from the virus is now largely in the rear-view mirror. We expect growth there to be much lower than it has been over the past year as the economy returns toward its pre-virus trend, policy support is withdrawn, and the pandemic-related boost to the country’s exports fades.”
“We think the spread between the two countries’ long-term bond yields will begin to narrow again before too long. We think the eventual narrowing of China’s massive current account surplus – which probably boosted the currency last year – will hold back the renminbi as the global economy continues to return to normal.”
“We expect the recent strength in the renminbi to prove short-lived: we forecast USD/CNY to finish 2022 at 6.90, compared with ~6.50 at present.”
|04:30||Japan||Industrial Production (MoM)||February||3.1%||-2.1%||-1.3%|
|04:30||Japan||Industrial Production (YoY)||February||-5.3%||-2.0%|
During today's Asian trading, the US dollar rose slightly against the euro, but fell against the pound and the yen.
The focus of the market this week is the meeting of the European Central Bank (ECB), which will be held on Thursday. Traders do not expect the ECB to take any action, but will wait for signals from it regarding the future normalization of policy. "The ECB is likely to leave both the level of key rates and the volume of asset repurchases unchanged. The tone of this meeting will be similar to the one in March, the ECB will remain in a wait - and-see position and will assess the change in financial conditions against the backdrop of the economic recovery," TD Securities experts said.
Goldman Sachs experts raised the three-month target for EUR/USD to $1.25 per euro from $1.21, noting, in particular, the expected improvement in the situation in the euro area.
The yield on 10-year US Treasuries on Monday is 1.562% per annum, compared with 1.584% on Friday. Interest rates fell last week on fears of a slowdown in the global vaccination rate after information emerged that the US Food and Drug Administration (FDA) had recommended suspending the use of Johnson & Johnson's COVID-19 coronavirus vaccine due to cases of thrombosis.
The ICE index, which tracks the dollar's performance against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona), fell 0.06%.
Bloomberg reports that the property website Rightmove said that U.K. house prices surged to a record this month with a tax break on purchases and rock-bottom interest rates prompting a “buying frenzy”.
The average cost of a home rose 2.1% to 327,797 pounds ($450,983) in April, marking only the second time in the past five years it rose that much in a single month. Almost a quarter of sales were for properties on the market less than a week, with larger homes outside London snapped up quickest.
The figures reflect an urge by consumers to move outside cities following three national lockdowns to control the coronavirus in the past year. Buyers are also taking advantage of borrowing costs near a record low and aid from the Treasury in the form of a holiday on stamp duty and support for borrowers with small deposits.
eFXdata reports that Danske Research discusses its expectations for ECB policy meeting.
"The ECB meeting on Thursday will be a stock taking meeting with focus on the resilient economic data and positive outlook for coming months while Lagarde will face questions on the recent PEPP purchase behaviour. We expect the growth outlook to be ‘broadly balanced’ paving the way for the PEPP purchase pace going back to February levels around EUR60bn after the June meeting. We think Lagarde will repeat the ‘delayed and not derailed’ recovery narrative. While we expect the June meeting will conclude in a lower PEPP buying, the battle about PEPP’s future is set for September in our view," Danske notes.
"For EUR/USD, ECB is unlikely to be a key story. At the last meeting, ECB’s optimism did spill over but given also the recent rally in spot from 1.17 to nearly 1.20, we would argue there is less scope to turn the tactical story even more positive. On net, we think that optimism towards the euro area is well priced in to inflation- and earnings expectations as well as FX," Danske adds.
Reuters reports that Ministry of Finance data showed that Japan's exports posted their strongest growth in more than three years in March, led by a surge in China-bound shipments.
Data showed exports surged 16.1% in March from a year earlier, marking the steepest rise since November 2017. That was better than an 11.6% jump expected by economists, and followed a 4.5% contraction in February.
The exports surge was also marked by especially strong shipments to Japan's largest trading partner China, while the pace of recovery in firms' exports to the United States remained relatively slow, said analysts.
Shipments to China, Japan's largest trading partner, soared 37.2% in the year to March, led by nonferrous metals and plastic materials, and also boosted by stronger exports of semiconductor machinery.
Exports to the United States, the world's top economy, rose 4.9% to post their first year-on-year gain in five months, as strong demand for cars and construction machinery such as bulldozers offset lower shipments of aircrafts.
Shipments to Asia as a whole gained 22.4%, while those to the European Union advanced 12.8% in March.
Imports rose 5.7% in March compared with the same month a year earlier, versus the median estimate for a 4.7% increase, bringing a trade surplus of 663.7 billion yen ($6.11 billion) versus the median estimate for a 490.0 billion yen surplus.
Resistance levels (open interest**, contracts)
Price at time of writing this review: $1.1958
Support levels (open interest**, contracts):
- Overall open interest on the CALL options and PUT options with the expiration date May, 7 is 51633 contracts (according to data from April, 16) with the maximum number of contracts with strike price $1,2000 (3548);
Price at time of writing this review: $1.3849
Support levels (open interest**, contracts):
- Overall open interest on the CALL options with the expiration date May, 7 is 13520 contracts, with the maximum number of contracts with strike price $1,4200 (3728);
- Overall open interest on the PUT options with the expiration date May, 7 is 16980 contracts, with the maximum number of contracts with strike price $1,3700 (1899);
- The ratio of PUT/CALL was 1.26 versus 1.28 from the previous trading day according to data from April, 16
* - The Chicago Mercantile Exchange bulletin (CME) is used for the calculation.
** - Open interest takes into account the total number of option contracts that are open at the moment.
|04:30 (GMT)||Japan||Industrial Production (MoM)||February||4.3%||-2.1%|
|04:30 (GMT)||Japan||Industrial Production (YoY)||February||-5.2%|
|08:00 (GMT)||Eurozone||Current account, unadjusted, bln||February||5.8|
|09:00 (GMT)||Eurozone||Construction Output, y/y||February||-1.9%|
|10:00 (GMT)||Germany||Bundesbank Monthly Report|
|12:15 (GMT)||Canada||Housing Starts||March||245.9||250|
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