As the market action in Europe starts to warm-up the main theme today in financial markets has been rising commodity prices. Iron ore and copper prices in particular are up big already on Monday, as risk sentiment and the ongoing reflation trade gathers pace.
Commodity-related currencies such as the Australian dollar, New Zealand dollar, and Canadian dollar are the strongest gainers in the foreign exchange market on Monday, while safe-haven currencies, like the Japanese yen and Swiss franc, are down on the day.
The Australian dollar is typically the main beneficiary when iron ore prices are moving higher, and this has been the case the morning as the AUDUSD pair has risen to a new multi-year high, of 0.7906.
Speaking of Australia, Fitch ratings has affirmed the nations AAA status this morning, while the Reserve Bank of Australia has been active in the bond market and buying the three-year yield back towards its target 0.1 percent as global bond yields continue to spike. The RBA has been on the wires this morning also, stating the central bank will not be raising interest rates for at least three years.
Gold is attempting to recover this morning, while silver is on the rise above $27.00 level. Oil prices are posting solid gains again this morning, with both Brent and WTI are posting plus 2 percent gains. Goldman Sachs has delivered an investment note stating that they expect Brent oil to hit $70.00 per barrel this year.
Despite the positive sentiment, futures markets are showing that US stocks are set to open in the red. Tech-related stocks remained pressured as the S&P 500 is currently incurring its worst consecutive daily losing streak so far this year.
The FTSE 100 is also under water ahead of the market open this morning, in front of a key speech from British Prime Minister Boris Johnson. PM Johnson is set to outline the United Kingdom’s way out of lockdown in March. The British pound has retreated from a new multi-year this morning and is testing back towards the 1.4000 handle ahead of Johnson’s speech.
The economic calendar is heavily German centric during the European trading session as Europe’s largest economy releases the IFO Institute for Economic Research’s German Business Expectations, Sentiment, and Climate data. Expectations are for a solid IFO data beat this month. The German Buba report is also set to be released later this morning.
European Central Bank President Christine Lagarde is also set to speak this afternoon. This could be a mover for euro currency traders, and especially if President Lagarde mentions the ongoing strength in the single currency and any upcoming policy action.
Chicago Fed and Dallas Manufacturing data is due during the United States trading session. Towards the end of the session FED member Bowman is also scheduled to speak. Markets will be paying close attention to the bond market today as yields continue to rise, and the ongoing weakness in US tech stocks.