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SquaredCommentary: 8th February 2021


8 February 2021

Risk has rallied and USD sold off after a weak NFP print (despite more or less in line with expectations, but downward revisions to previous months) and moves towards another US fiscal stimulus package. The NFP print was weak enough to keep the US in a goldilocks scenario where Monetary and Fiscal policy can remain loose.

Drivers


The Covid news over the weekend was focused on the study which showed that the AstraZeneca vaccine fails to prevent mild and moderate Covid from the South African strain of the virus.  The study was a small sample and also showed that no severe cases resulting in hospitalization or death.

Another important week for US yields as there will be a record amount of treasury auctions as well as inflation data on Wednesday, a strong print could reignite taper concerns and lead to USD higher and risk off. We will also hear from Powell on Wednesday

Canada employment was also weak with -213k net change and the unemployment rate jumping up to 9.4%. All of the loss of jobs came from Part-Time. Yellen in the news over the weekend pushing for a large fiscal package saying that the US could reach full employment next year if Congress passes Joe Biden’s $1.9tn stimulus package which should also support risk sentiment.

Any risk off views are best expressed via short CAD (due to weak employment last week) or short ZAR due to the vaccine resistance virus variant there. CrossJPY does feel a bit overextended here even with the risk on moves. CADJPY breaking fresh highs and AUDJPY approaching 81.00. Probably not wise to chase those moves here and   selling CADJPY here give the weak employment data last week could make sense.

Numbers to Watch


EURUSD has firmed up support at 1.1950 last week so market may look to be long above there.

Market Updates

Rony Nehme - Chief Market Analyst at SquaredFinancial


Rony has over twenty years of experience in financial planning and professional proprietary trading in the equity and currency markets. Prior to joining SquaredFinancial, Rony educated and coached numerous traders helping them find their edge and arming them with proven trading methodologies to successfully battle the markets. Rony obtained a B.S. in Finance from Concordia University in Montreal, and his professional designations include Certified Financial Planner CFP® obtained from the Canadian Securities Institute.

#source

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