Daily Market Pulse

Rising oil prices and U.S desks return


The U.S markets were closed yesterday due to Presidents’ day, thus both trading volumes and liquidity were noticeably thinner than usual in the global markets. U.S traders return today after a long weekend and market liquidity is set to rise. 


The single currency gained 0.08% against the greenback on Monday amid mixed economic data. Manufacturing in the Eurozone suffered a setback at the end of Q4. Industrial production dropped by 1.6% month-on-month in December, partially reversing the cumulative 5% increase in October and November. Moreover, yesterday's final economic report showed that the Eurozone's trade surplus soared to a record high in December, at €27.5B after €25.1B in November, about 3% of GDP in annualized terms. Exports rose, by 1.3%, while imports edged lower by 0.3%. Looking ahead, another rather busy day on the economic front, with a slew of reports to be released.


The pound closed up 0.40% yesterday against a weaker U.S dollar as hopes that the U.K’s aggressive Covid-19 vaccine rollout will enable the country to see a swifter economic recovery than other European countries. On that note, it’s worth noting that the U.K has achieved the target of vaccinating the most ‘at risk’ groups from Covid-19, and has now inoculated more than 25% of the adult population of the country. Still, Prime Minister Boris Johnson is drawing up plans for gradually lifting pandemic restrictions on socializing, shopping, and traveling to work, and aims to set out target dates for when the curbs will be eased.


Yesterday, the Japanese yen rose 0.43% against the U.S dollar for the third straight trading session. Although the progress in the rollout of vaccines across the globe, along with expectations for a massive U.S stimulus package, hampered demand for the JPY, investors further took cues from surging U.S Treasury bond yields. The yield on the benchmark 10-year U.S government bond jumped to the highest level since February 2020 amid worries that rising inflationary pressures would hurt the value of longer-dated debt. Later today, the Tertiary Industry Activity Index will provide indications as to economic health.


Surging oil prices and the optimism for a global economic recovery from Covid-19 boosted the oil-linked Loonie, which edged up 0.42% against the U.S dollar, on Monday. Still, recent data from Canada’s manufacturing sales also helped the CAD. Manufacturing sales rose 0.9% month-on-month in December, well above the expectation of 0.2%. Sales were up in 9 of 21 industries. On a quarterly basis, sales rose 1.1% in Q4. Today, the Canadian dollar should continue receiving support from the continuation of the oil market rally. West Texas Intermediate is managing to get above the psychological U$60/barrel level amid rising tensions in the Middle East.


The Mexican peso tumbled 0.06% as Covid-19 cases continued to claim lives in the country. The total number of infections rose to nearly 2 million as of Monday, while deaths were at 174,657. But the health ministry said the real number of cases and deaths is likely to be significantly higher than the official count. Still, despite higher crude oil prices, the MXN should continue trading influenced by the dovish commentary from Mexico’s Central Bank at the end of last week. Policymakers suggested that Mexico could see a further two rate cuts in 2021 if inflation stays in line with expectations.


The Chinese markets remain closed for the Chinese New Year. The Chinese yuan remained steady in offshore trade, on Monday. There are no material figures to consider in the upcoming days.


Brazilian markets remain closed due to the Carnival holiday.


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