Daily Market Outlook, March 12, 2021
Fresh record high for US stocks overnight, aided by tech stocks as President Biden’s $1.9tn fiscal stimulus bill was signed into law. The ECB also pledged to ramp up bond purchases in the coming months to preserve favourable financing conditions but said it was not “yield curve control”. The S&P 500 rose for the third session by 1.04% while VIX retreated to 21.91. UST bonds closed mixed with the yield curve bear steepening and the 10-year yield hovering at 1.53% despite a healthy $24bn 30-year bond auction. On the corporate issuance front, Verizon sold $25bn of bonds. The 3-month LIBOR was at 0.1839%. The USD softened while WTI oil price rose. Meanwhile, the Biden administration has tightened export licenses for export components for some Huawei suppliers.
US initial jobless claims fell more than expected from 754k to 712k last week. The JOLTS job openings also rose more than expected to 6.92m in January.
The ECB upgraded its inflation forecast from 1.0% to 1.5% and opined that inflation could possibly hit 2.0% by year-end but is likely temporary and technical. The growth forecast was also upgraded a tad from 3.9% to 4.0%, with risks becoming more balanced. ECB’s Lagarde also said the central bank is monitoring but not targeting the Euro. Separately, J&J’s vaccine has been approved by the EU regulator.
G10 FX Options Expiries for 10AM New York Cut
EUR/USD: $1.1900(E574mln), $1.1925-30(E1.3bln), $1.1940-50(E475mln), $1.1995-1.2000(E2.56bln, E2.3bln EUR puts), $1.2100-15(E1.2bln), $1.2125-30(E717mln)
USD/JPY: Y105.95-106.00($2.7bln), Y108.30-35($2.26bln-USD puts), Y108.50($507mln, $497mln-USD puts), Y108.90-109.00($702mln-USD puts)
EUR/JPY: Y130.00(E431mln-EUR puts)
USD/NOK: Nok8.45($518mln)
AUD/USD: $0.7690(A$521mln), $0.7720-25(A$1.1bln-AUD puts), $0.7745-60(A$1.2bln-AUD puts), $0.7925-30(A$616mln)
AUD/NZD: N$1.0730(A$1.3bln-AUD puts)
USD/CAD: C$1.2600($510mln)
USD/MXN: Mxn20.30($1.1bln), Mxn20.55($617mln-USD puts), Mxn20.70($875mln-USD puts), Mxn21.00($630mln)
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Larger Option Pipeline
EUR/USD: Mar17 $1.1900(E1.3bln), $1.2000(E1.2bln), $1.2040-55(E1.4bln); Mar18 $1.1900(E1.2bln)
USD/JPY: Mar16 Y106.00($1.6bln), Y107.00($1.45bln); Mar17 Y108.50-55($1.2bln)
GBP/USD: Mar16 $1.3750(Gbp797mln-GBP puts)
EUR/GBP: Mar18 Gbp0.8600(E1.3bln-EUR puts)
AUD/USD: Mar16 $0.7500(A$1.2bln), $0.7650(A$1.4bln); Mar18 $0.7750(A$1.1bln), $0.7850(A$1.2bln)
AUD/NZD: Mar18 N$1.0770-75(A$1.3bln-AUD puts)
USD/CAD: Mar16 C$1.2800($1.15bln); Mar18 C$1.2685-90($1.6bln)
USD/CNY: Mar15 Cny6.47($1.35bln-USD puts); Mar18 Cny6.3450($1.2bln), Cny6.43($1.1bln)
Technical & Trade Views
EURUSD Bias: Bullish above 1.20 bearish below
EURUSD From a technical and trading perspective, the closing breach of 1.21 and the descending trendline is a bullish development opening a retest of prior highs at 1.2350, only a move back through 1.20 would suggest further downside opening a potential test of 1.17 yearly pivot...UPDATE responsive buying from the equality objective at 1.1850, through yesterday's highs opens pivotal 1.20 test
Flow reports suggest congestion through the 1.1820-1.1780 area with weak stops possibly being cleared up quickly through to the 1.1750 and again stronger congestion and likely to continue through the 1.1700 level, topside offers light back through the 1.1920 area and weak stops possibly setting up a small short squeeze through to the 1.1980 area before stronger offers start to appear into the 1.2000 level. Topside offers light through to the 1.1950 area with offers then starting to increase through to the 1.2000 level with weak stops above the 1.2020 level before the offers return increasing into the 1.2040-60 level.
GBPUSD Bias: Bullish above 1.3750 targeting 1.44
GBPUSD From a technical and trading perspective, retest of 1.3750 pivotal trend support has seen fresh demand develop as this level continues to attract support bulls will target a retest of cycle highs en route to 1.44 upside objective.
Flow reports suggest topside offers around the 1.4000 level and slightly stronger stops appear for the market to open to a move through to the 1.4050-1.4100 with patchy resistance until closer to the topside of that range and stronger offers thereafter, downside bids into the 1.3800 level with weak stops likely on a dip through the 1.3780-40 levels with congestion likely to soak up much of the selling through to the 1.3700 level with possibly strong congestion then around the 1.3700 level increasing into the 1.3650 level before being able to make a move to the 1.3600 area and strong bids again.
USDJPY Bias: Bullish above 107.30 targeting 109.85
USDJPY From a technical and trading perspective, as 104.50 supports there is potential for a further squeeze higher to test offers towards 107. A loss of 103.50 would negate further upside and suggest a resumption of trend. Target achieved, look for a profit taking pause to develop above 108.60, as 107.30 support bulls will target a test of 109.85 next
Flow reports suggest topside congestion is likely to soak up some of the weak stops above through to the 109.50 area where strong congestion is likely to appear and increasing offers into the 110.00 and like the previous spikes at the beginning of last year any move is likely to find resistance above and continuing through the 110.00 with break out stops likely to be a little more nervous, downside bids light through to the 108.00 level with weak stops on any retrace through the 107.80 level and opening a dip to the 106.00 area possible over the coming week
AUDUSD Bias: Bullish above .7560 bullish targeting .8000
AUDUSD From a technical and trading perspective, as the major trendline support at .7560 now acts as support, look for target wave 5 upside objective towards .8000. A closing breach of .7730 of the internal descending trendline will encourage the bullish thesis.
Flow reports suggest topside offers through the 0.7700-20 area with limited potential for stops however, the offers don’t really look that strong until the 0.7800-20 areas with weak stops likely beyond that area to open up the potential for another higher run, downside bids into the 76 cents level with strong bids likely through to the 0.7580 area, weak stops are likely to be few and far between with stronger bids likely into the 0.7550 level and likely stronger congestion through to the 0.7500 area.
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 65% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!