A new week and renewed hunt for yield (Daily analysis 15.02.2021)

A reflation trend is at its best. The US dollar goes down while equity indexes futures soar together with commodities prices. The most risky currencies in both G-10 and EM outperform.

The EUR/USD pair fails to breach 1.2150 mark. Once again, the euro underperforms against the pound sterling as the GBP/USD exchange rate touched 1.39 on Monday morning to trade at the highest level since 2018. The Scandies continue their stellar performance. The EUR/NOK pair is pushed to the new year-to-date lows while the EUR/SEK hovers just a notch above 10.00 and three-year-lows. In the emerging markets space, the South African rand is the strongest performer as weakness from January resulting from the discovery of Covid-19 mutation has already been completely retraced. The Turkish lira trades bid and the USD/TRY pair has managed to push below the 7.00 mark for the first time since early August.

This week markets will focus on numerous economic releases including German ZEW on Tuesday and US retail sales on Wednesday. The FOMC minutes should point that the Federal Reserve is in no hurry to abandon its current accommodative stance and therefore should not give the greenback a boost. On Friday, Flash PMIs will be scrutinized for further evidence of the eurozone’s economic underperformance.