Oil currencies outperform the US dollar (Daily analysis 5.03.2021)

Jittery markets continue as Jerome Powell failed miserably to stop the bond market rout. As a consequence, equities plummet, and the US dollar advances. Investors await the monthly US jobs report, which may trigger further turbulences.

The Fed Chairman downplayed the threat of a sustained rise in inflation and once again promised patience before even considering abandoning an extremely accommodative policy stance. That failed to calm the markets as a more decisive approach towards rising rates had been expected. Noteworthy, given the media blackout period, it was the last chance to push yields lower ahead of the FOMC meeting scheduled on March 17. Disappointment resulted in the US dollar rally. The EUR/USD rate broke 1.20 and sold off toward 1.19. The GBP/USD pair slipped below 1.38 ahead of the monthly jobs market report.

Skyrocketing oil prices boost the commodity block

In the G-10 space, some currencies manage to post gains against the greenback. The Canadian dollar and the Norwegian krone outperform in the aftermath of the OPEC + meeting. The committee will keep oil output unchanged throughout April. Although Russia and Kazakhstan have secured an exemption to the deal, it means only a minor rise in the output fractionally. More importantly, Saudi Arabia will stick to its voluntary cut (which amounts to 1mn bpd) in the next few weeks. Brent prices have already jumped almost 10 pct in just three days and exceed 68.5 USD/bbl.