A brief yield’s pullback fails to derail the greenback (Daily analysis 1.03.2021)

1 Mar 2021 9:05|Bartosz Sawicki

A sharp rise in the U.S. treasury yields caused severe market turbulences in February. On Monday, despite a strong, but brief pullback yields rise once again, which supports the U.S. dollar.

EUR/USD buyers fail to push the main currency pair above the 1,21 mark and another push lower takes place. 1,20 acts as a crucial level to watch as a break lower might result in a knee-jerk reaction and open further downside. In contrast to the euro, the pound sterling bounces, but has so far also failed to recover above 1,40. Nonetheless, EUR/GBP turns lower again and declines by a hefty 0.5 pct. In the emerging markets space, the zloty underperforms and EUR/PLN has already risen above 4,53 to trade at the highest levels in over a month. The most risky EMEA currencies, that is the South African rand, the Russian ruble and the Turkish lira all gain, led by the latter, which sky rockets over 2 pct.

This week markets will monitor closely the developments on the bond market as yields continue to drive the sentiment. A handful of Fedspeak might sched a new light on this trend, as monetary authorities should prove reluctant to allow for further bond selling resulting in the tightening of financial conditions. Datawise it is a busy week ahead with ISM data and the jobs market report due.

1 Mar 2021 9:05|Bartosz Sawicki

This commentary is not a recommendation within the meaning of Regulation of the Minister of Finance of 19 October 2005. It has been prepared for information purposes only and should not serve as a basis for making any investment decisions. Neither the author nor the publisher can be held liable for investment decisions made on the basis of information contained in this commentary. Copying or duplicating this report without acknowledgement of the source is prohibited.

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