Frustration with AstraZeneca continues
Wednesday’s European session was not very productive for stocks and currencies, with the euro and the pound remaining negatively charged against the dollar despite the upbeat flash Markit PMI readings for March.
The blames go to the troubling vaccine program in the Eurozone, which turned even ugly after AstraZeneca’s injections were accused of causing negative blood symptoms in several countries. Although the EU lifted its suspension on the vaccine, frustration with AstraZeneca did not cease as Brussels found that the contract with the drug company is not fulfilling its commitments to the EU, giving instead a priority to the UK while using facilities within the union. Speculations are now increasing that the EU will ban vaccine exports to the UK, which could be another blow to their already muddy trade tensions between the sides and a headwind to the virus situation in both countries as governments hesitate to move with their reopening plans ahead of Easter holidays. The US added more fuel to the fire after questioning the accuracy of the data sets used by AstraZeneca to prove its efficacy.
Euro/dollar was struggling to hold above the key support of 1.1830 as the drop below the 200-day simple moving average increased downside risks in the market. The uptrend in pound/dollar also lost some credibility following the close below the 50-day SMA, with the pair falling as low as 1.3673 today before inching back into the 1.3700 region.
In stock indices, the pan-European STOXX 600 was marginally lower on the day, weighed by losses in utilities and consumer non-cyclicals.
US flash Markit PMIs, Powell & Yellen testimony in focus
Turning to the US, the focus will turn to the preliminary Markit PMIs at 13:45 as investors expect the data to hit fresh highs, further brightening the outlook for the economy. The greenback, however, has been mainly driven by inflation expectations, the rally in US Treasury yields, and prospects of an earlier monetary policy tightening over the past few weeks and unless the figures affect these navigators, the currency may not show any sharp volatility. Probably, comments from the Fed chief and the US Treasury Secretary Janet Yellen during their virtual testimony before the Senate Banking Committee may attract greater attention, with lawmakers expected to ask questions about changes in banking regulations, higher corporate rates, and further clarifications about inflation and the Fed’s future policy plans.
Dollar/yen sought support near the broken ascending channel and the 20-day SMA, ignoring the surprising decline in durable goods orders. On the other hand, dollar/swissie extended Tuesday’s rebound towards March peak of 0.9374.
Aussie, loonie ignore monetary policy signals
In other headlines, the RBA’s Deputy governor admitted that interest rates will not rise until inflation is sustainably back in the 2-3% range, with aussie/dollar maintaining its negative momentum in the aftermath near the 0.7600 mark.
News that Bank of Canada will start winding down its emergency programs beginning early April and then into May were shrugged off by the loonie, with dollar/loonie sustaining last week’s rebound around 1.2588. The EIA’s weekly oil inventory report could be a potential market-moving factor for the Canadian dollar later today.
Origin: XM
