Dollar soared again after US Treasury yields resumed their sharp growth. In fact, 10-year yields have risen by 8.9 basis points to 1.730%, the highest level it hit since January 2020.30-year yields also reached their highest level since last summer.
Obviously, the increase came right after the Federal Reserve announced its decision to keep interest rates unchanged until 2023. Such fueled concerns that demand for bonds will shrink in the future, since everyone will certainly chase higher yields after a rate hike.
That being said, EUR / USD traded downwards, so now the bears have to return to 1.1939 in order to resume growth in the market. A break above the level should set off a larger jump towards 1.1990, which will then lead to an increase to 1.2050 and 1.2110. But if the quote consolidates below 1.1884, EUR / USD will immediately drop to 1.1835.
On a different note, the White House reported yesterday that it is now ready to extend help to neighboring countries. Apparently, the US is almost finished vaccinating its target population (more than 100 million people), so it can already provide around 4 million vaccine supply to Canada and Mexico. More specifically, 2.5 million doses will be shipped to Mexico, while 1.5 million will be given to Canada.
But while the US is busy trying to help others, senior officials are back on the slippery slope of trade relations. Yesterday, representatives from US and China exchanged dialogue once again, but the result is that both parties resumed publicly criticizing each other. Most probably, accusations will escalate further, although it is the last thing both countries want amid this global pandemic and crisis.
Macroeconomic statistics were also very disappointing, although it fortunately did not lead to serious market fluctuations. According to the US Department of labor, initial jobless claims in the country rose to 770,000, which is 45,000 higher than the previous week. Such an increase is a surprise to economists, as they expected jobless claims to fall to 700,000.
At the same time, the four-week moving average dropped to 746,250, which is 16,000 lower than the figure last week.
On the bright side, manufacturing activity in some parts of the US increased rather strongly this March. According to the Philadelphia Fed, composite activity in the area rose to 51.8 points, which is clearly higher than the record a month earlier. Most probably, the index increased because of the sharp rise in new orders, which jumped to a 50-year high of 50.9 points this March.
JPY
The Bank of Japan kept its key interest rates unchanged at -0.1%. However, it stressed that it is open to policy changes if necessary, that is, if economic conditions in the country deteriorates.
Fortunately, the decision did not influence activity in the market, so USD / JPY remained trading sideways. At the moment, price is fluctuating around 108.34-109.34, but if the quote drops below 108.80, the pair will immediately collapse to 108.34.
Regarding macroeconomic statistics, CPI in Japan is reported to have declined by 0.4% year-on-year this February, but rose to -0.6% in January. The core consumer price index, which does not include volatile categories, fell by 0.4%.These figures indicate that negative rates will persist for a very long time.