Although the manufacturing ISM in January turned out to be slightly worse than expected (58.7p versus 60p), investor sentiment regarding the dollar's outlook remains positive. The growth has been observed for the eighth month in a row, the inflation acceleration index is at its maximum since 2012, which gives grounds for the growth of yields on inflation-protected TIPS bonds. Which, in turn, reflect the positive expectations of the business environment regarding the prospects for consumer demand.
A similar report from Markit was even more positive. According to its data, the manufacturing sector, under the influence of unprecedented support for the economy, finally broke through to its maximum since the first wave of the crisis in 2008.
Even though Markit indices have traditionally received much less attention than ISM, there is another aspect to be considered. If ISM largely reflects the view of the American business community, then Markit, which conducts similar research across all countries of the world, shows more of a global assessment of the state of the US economy. Which in this case relies on, firstly, an assessment of the effectiveness of stimulating "anti-covid" programs, and secondly, expects that new incentive measures will support the current takeoff. In other words, the approval of the $1.9 trillion additional stimulus program requested by Biden is already assessed by the market as a positive step that will help strengthen the US economy. Despite the prohibitive level of debt, of course.
Silver futures rebounded from the highs, which was immediately interpreted by players as a signal to reduce tensions. Apparently, while the markets do not see systemic risk, and regard the incident with GameStop shares as a single share, the dollar remains the favorite across the entire spectrum of the market.
NZD/USD
Even though the NZD retained a noticeable advantage to the bullish side (net long position decreased by 70 million to 1.068 billion in the reporting week of the CFTC), according to other criteria, a return to growth is becoming less likely.
As long as the target price remains below the long-term average, with the trend towards further decline, the NZD/USD pair will continue to experience pressure. We assume that an attempt will be made to test the support zone of 0.7090 / 7100, after which the bearish pressure will either increase, or a return to the sideways range will occur. Judging by the behavior of the target price, a decline is the most likely scenario. The second interim target of 0.7000, followed by 0.6870 / 75, is still too early to guess, given the strong uncertainty about the Fed's position and incentives that the US Congress is considering.
AUD/USD
At the meeting that ended this morning, the RBA left the main parameters of the current monetary policy unchanged but announced the expansion of the asset buyback program by 100 billion. This news is undoubtedly bearish for the Aussie since not only an increase in forecasts was predicted, but also the absence of a decision on QE, or an extension, but by 50 billion, not 100 billion.
The net long position in AUD decreased by 314 million during the reporting week, falling to a symbolic +60 million. It can be said that neither bulls nor bears have an advantage in the futures market, taking into account the situation on the stock market and the spread of returns, the Australian dollar, as a week earlier, is aimed at a very serious decline.
If in the previous review we assumed that the Aussie is likely to remain in the range, but a slight downward trend prevails, as of Tuesday, the situation became more bearish. At present, there is an attempt to gain a foothold below 0.7594, there is reason to believe that this attempt will be successful. The correction is likely to be deep, the nearest target is 0.7415, the next one is 0.7575, purchases counting on the resumption of growth are not fundamentally justified yet.