There's a lot more the Fed can do

Jens Nærvig Pedersen Danske Bank A/S

Market movers today

In Norway, GDP-figures for May will be published this morning. Besides the strong recovery in private consumption, the significant drop in unemployment during May points to a solid pick-up in growth. At this point, we should see some improvement in productivity growth as well. As a result, we expect mainland GDP to rise 4.5% m/m in May, which is marginally above consensus.

EIA's weekly oil inventory report due today is set to shed light on the latest developments in the US oil market. Yesterday, API reported that crude stock rose 2mb last week.

Selected market news

Fed vice-chair Richard Clarida on Tuesday said: "We have a lot of accommodation in place. There is more that we can do. There is more that we will do if we need to". Cleveland Fed president Loretta Mester said: "If we don't get further fiscal support, things won't come back as well as they could".

EU and UK Brexit negotiators held informal talks on Tuesday. UK Prime Minister Boris Johnson warned Germany's Prime Minister Angela Merkel that the UK is ready to continue without a trade deal if the EU does not compromise, while the UK remains committed to working hard to find an agreement.

Advisors to the US Secretary of State Michael Pompeo are said to have aired the idea of undermining the HKD peg in order to push back on China's recent moves to limit Hong Kong's political freedom. One way would be to limit the availability of Hong Kong banks to buy USD. HKD spot and FX forwards did not move on the news.

Latest COVID-19 related news includes Brazil President Jair Bolsanaro testing positive for COVID-19. He said yesterday that he feels perfectly well. The US has given the WHO a one-year notice before it is set to leave on 6 July 2021.

The rally in risky assets took a pause yesterday and it extended to the Asian session overnight. It further halted the past week's downward trend in broad USD, which took EUR/USD back below 1.13 level. Industrial metal prices are continuing higher unscathed, though. In particular, the price of copper has rallied sharply close to USD6,200/MT.

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Jens Nærvig Pedersen

Danske Bank A/S

EUR/USD holds firm near 1.1850 amid USD weakness

EUR/USD remains strongly bid around 1.1850 in European trading on Monday. The USD/JPY slide-led broad US Dollar weakness helps the pair build on Friday's recovery ahead of the Eurozone Sentix Investor Confidence data for February.

GBP/USD hovers near 1.3600 as UK government crisis weighs on Pound Sterling

GBP/USD moves sideways after registering modest gains in the previous session, trading around 1.3610 during the European hours on Monday. The pair could come under pressure as the Pound Sterling may weaken amid a fresh government crisis in the United Kingdom.

Gold remains supported by China's buying and USD weakness as traders eye US data

Gold struggles to capitalize on its intraday move up and remains below the $5,100 mark heading into the European session amid mixed cues. Data released over the weekend showed that the People's Bank of China extended its buying spree for a 15th month in January. Moreover, dovish US Fed expectations and concerns about the central bank's independence drag the US Dollar lower for the second straight day, providing an additional boost to the non-yielding yellow metal.

Cardano steadies as whale selling caps recovery

Cardano (ADA) steadies at $0.27 at the time of writing on Monday after slipping more than 5% in the previous week. On-chain data indicate a bearish trend, with certain whales offloading ADA. However, the technical outlook suggests bearish momentum is weakening, raising the possibility of a short-term relief rebound if buying interest picks up.

Japanese PM Takaichi nabs unprecedented victory – US data eyed this week

I do not think I would be exaggerating to say that Japanese Prime Minister Sanae Takaichi’s snap general election gamble paid off over the weekend – and then some. This secured the Liberal Democratic Party (LDP) an unprecedented mandate just three months into her tenure.

Bitcoin, Ethereum and Ripple consolidate after massive sell-off

Bitcoin, Ethereum, and Ripple prices consolidated on Monday after correcting by nearly 9%, 8%, and 10% in the previous week, respectively. BTC is hovering around $70,000, while ETH and XRP are facing rejection at key levels. Traders should be cautious: despite recent stabilization, upside recovery for these top three cryptocurrencies is capped as the broader trend remains bearish.