US Treasury to sell $60B of 2 year notes at the top of the hour

The 6 month averages for the 2 year auction

The US treasury will sell $60 billion of two-year notes at the top of the hour.  Below are some of the prior auction averages:
  • Last auction high yield 0.119%. The average over the last 6 months 0.139%
  • Bid to cover.  2.52x six-month average
  • Dealers. 32.6% six-month average
  • Directs: 15.1% six-month average
  • Indirects: 52.3% six month average
The current WI is trading at 0.1525%

EURUSD trades to new lows

EURUSD approaches 200 day MA

The EURUSD moved to a new session low and in the process dip below a swing area going back to March 8 March 9 and March 10 between 1.1864 and 1.18677. The low reached 1.1861.  The pair currently trades back above that area at 1.1870.  A move back below will be eyed by sellers/bears.
EURUSD approaches 200 day MA
On a break, traders will start to focus on the 200 day MA currently at 1.18496.  That moving average is moving up little by little and will force traders to make a decision.  Break below and increase the bearish bias, or buy against the level and keep the buyers in control?
Looking at the daily chart below, the price is not traded below its 200 day moving average since May 2020.  The price has now traded below the 100 day moving average since the last break on March 4. A move below the 200 day moving average would target the last swing low from November at 1.17994 (call it 1.1800). If the 200 day moving averages approached, I would expect dip buyers on the first look, with stops on a break below.
EURUSD approaches its 200 day moving average

Bank of Spain cuts economic outlook

More signs of slowing in the eurozone economy

  • Sees economy shrinking by 0.4% q/q in Q1
  • Revises 2021 GDP to 6% from 6.8% forecast in December
  • Sees 2022 GDP rising 5.3%
  • Sees inflation this year at 1.4% from 0.6% in December
  • Sees inflation 0.8% in 2022 and 1.2% in 2023
  • Sees unemployment this year at 17% vs 18.3% in December
Global markets are souring on slower economic growth in Europe. Oil is particularly soft today, down $2.32 to $59.17.

Dollar to stay buoyed, euro to underperform – Barclays

Barclays says that the dollar “offers the best of both worlds”

The firm says that the dollar is the place to be with G10 nations set to lead growth against all but a handful of emerging markets (US of course one of the leaders in the recovery), and the greenback also benefits as the best-performing safe haven in the market.
Building on the dollar smile theory, the firm adds that the dollar is at “both ends at once, like Schrodinger’s cat in two simultaneous states, as markets bounce between radical post-COVID uncertainty and ebullience on surging US data”.
As such, “the dollar’s Schrodinger’s-cat grin is to keep it buoyant at elevated levels, but not lead to significant appreciation” as it still remains overvalued, according to Barclays.
The firm also shared some insights on some other currencies as well:

EUR – To underperform “mainly due to the euro area’s sluggish economic recovery, which will create a growth gap not only between the euro area and the US, but also between the euro area and the UK, Scandinavia and the antipodeans. This is largely manifested by the opening gap between US and euro area long-term rates, but it should be also reflected by FX.” They forecast EUR/USD to be at 1.14 at year-end.

JPY – To “remain under downward pressures in the coming quarters due to reduced safe-haven demand amid global growth recovery, widening foreign-domestic yield differentials, and the potential revival of capital outflows through both investment and M&A.” They forecast USD/JPY to be at 111 at year-end.

GBP – To outperform both the dollar and euro on the quick vaccine rollout and “generous fiscal stimulus”. They forecast GBP/USD at 1.40, EUR/GBP at 0.81 at year-end.

Dollar continues to move from strength to strength so far on the session

Dollar continues to keep higher across the board in European morning trade

The market is adopting a more risk averse tone as the dollar and yen are firming across the board in the major currencies space. USD/JPY may have fallen to 108.44 – its lowest level since 11 March – but the dollar is firming elsewhere.
NZD/USD has plunged further to fall by 1.7% to 0.7041 as the track towards 0.7000 continues, while AUD/USD has declined by 1% on the day now to 0.7666.
Adding to that, GBP/USD has fallen to a fresh low since 9 February @ 1.3768:
GBP/USD D1 23-03
The pair is now threatening support @ 1.3776 and sellers are also looking to keep below a key trendline support stretching all the way back to late June last year.
A break there may yet put the focus back on the 100-day moving average (red line) if the dollar continues to keep this up ahead of month-end and quarter-end rebalancing.


As mentioned earlier here, Treasury yields may be keeping lower but this may not be one of those days that we see the dollar trail and stocks rally because of it. There is a whiff of risk aversion in the market and it is gathering pace ahead of US trading.

Treasury yields dribble lower in European morning trade

10-year Treasury yields fall over 5 bps to 1.641%


As much as a relief in the bond market may be good news for general market sentiment, the latest push lower in yields has that sense of a risk-off element to it.

The tone in the market is erring towards being more defensive and cautious as Turkey keeps emerging markets on edge, Europe bracing itself for a third virus wave with German extending lockdown until 18 April, and China risk appetite is looking rather shaky.
Adding to that is a stronger dollar as well, with the antipodeans sinking today. NZD/USD is hovering at three-month lows, down by 1.4% on the day after having seen key technical levels breached and looking poised for a potential push towards 0.7000 next.
As such, be wary that today may not necessarily see the lower yields, higher stocks correlation we have come to familiarise ourselves with in recent weeks.

Eurostoxx futures -0.4% in early European trading

softer tones observed in early trades

  • German DAX futures -0.3%
  • UK FTSE futures -0.5%
  • Spanish IBEX futures -0.5%
The drag in Asia is carrying over to Europe, with Chinese equities closing lower after another weak showing today. The Shanghai Composite index closed down 0.9% while the CSI 300 index ended the day down by 1.0%.
US futures are also reflecting some softer tones with S&P 500 futures down 0.2%.

China says it opposes European sanctions, to lodge protest on the matter

Comments by the China foreign ministry

This is in response to the Xinjiang issue where European countries have decided to impose sanctions on Chinese officials, as reported earlier here.
China has been voicing their displeasure since and is now saying that they will summon the EU ambassador to lodge a protest against the sanctions.
Geopolitics have largely taken a backseat since the turn of the year and I don’t see this being any different. It’s not likely to escalate into something major – at least for now.
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