Manufacturing PMIs at center stage after France imposes 4-week lockdown

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Manufacturing PMIs at center stage after France imposes 4-week lockdown


ANDYesterday’s European session turned out to be a rather moderate affair, bringing the curtain down on a very positive month and quarter, with the main focus being on the prospects for economic reopening and, although that prospect is much more close in the US and UK, there is growing concern after French President Emmanuel Macron’s decision to announce a four-week nationwide lockdown from Saturday, in a bid to bring infections, hospitalizations and deaths in France.
The main concern is that he may have left it too late after 59,038 new infections were reported yesterday, and with so much skepticism about vaccines across the country, especially on the Astra hit. / Oxford, as well as the rest of Europe, it’s hard to see. and end of the current crisis in Europe.

While European markets ended the month fairly calm, US markets saw a much more positive end of proceedings, with the S & P500 approaching the 4000 level and a new high, as seen by an inspired push. by the Nasdaq and Russell. US stocks end the quarter more or less the same way they started it.

Optimism about the impact of a new $ 2 billion stimulus package on infrastructure spending simply served to fuel the fire of last month’s $ 1.9 billion stimulus bill, which was in addition to the $ 900 billion that came at the start of the year.

There was some concern about how it would be funded, including a corporate tax hike to 28% and other tax hike measures, but for now the markets look pretty bullish. on that, with Microsoft leading the winners after signing a $ 21.9 billion deal. with the US military for augmented reality headsets.

US 10-year yields once again pushed the close to their 14-month high at 1.73%.

Ordinarily, European markets would have been supposed to get a decent read from such a finish, and they should open slightly higher, but given the current state of affairs when it comes to viral infections, there is a concern. that the region does not know. left behind, despite manufacturing figures which, on the whole, hold up well.

The manufacturing PMI has been one of the main bright spots amid the sluggish economic recovery in Europe, as companies adjust to the restrictions surrounding them and demonstrate resilience in the face of a changed environment that has been under pressure. largely in place in some countries. form or whatever since October of last year.

With no prospect of imminent easing, political leaders in Europe’s four major economies hope that this resilience will continue for a while longer, as the service sector across the continent continues to grapple with continued closures in their respective sectors. .

In France, that resilience is expected to be sustained after last week’s flash numbers rose from 56.1 to 58.8 in February, while Germany also jumped from 60.7 to 66.6. Italy and Spain are also expected to strengthen further to 59.8 and 56 respectively.

The US manufacturing ISM report for March is also expected to strengthen to 61.5, with special attention likely to be on both prices paid, which reached 86 last month, and a high in 12 years, and on the employment component, which has reached its highest level. highest level in two years. A high number here would raise expectations of a strong payroll report tomorrow or in a month.

Weekly jobless claims are expected to continue falling to 675k from 684k.

There is also the small matter of an OPEC + meeting today, with the cartel meeting to decide whether or not to extend the current level of production caps beyond April. Oil prices have had a very decent start to the year, pushed up by expectations of higher global demand, but these have taken a hit in recent days as it becomes clear that the restrictions spread across Europe, as well as a totally shambolic vaccine deployment would temper these expectations.

These events prompted OPEC + to lower its demand forecast by 300,000 barrels per day earlier this week, which means they are probably unlikely to change their quotas again.

EURUSD – with the 1.1750 area giving way, the bias remains for a movement towards the previous lows at 1.1615. Yesterday we found some resistance in the 1 1760 area, while behind we also have 1.1870.

GBPUSD – failing to break above the 50-day MA earlier this week, the pound has retreated and is currently finding support in the 1.3710 area. Below that we also have last week’s lows at 1.3670. We need to push back and close above 1.3850 to reopen the 1.3920 area.

EURGBP – a move below the 0.8500 level opens the possibility of a move towards 0.8400, then down to last year’s lows at 0.8280. We need to see movement above 0.8570 to stabilize.

USDJPY – appears to be on track for a move towards 111.20, as well as 2020 highs at 112.20. The breakthrough through the 200 week MA opens the prospect of further gains with support now falling to the 109.80 area.

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