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SquaredCommentary: 9th February 2021


9 February 2021

Risk has rallied and USD sold off after a weak NFP print and moves towards another US fiscal stimulus package.  It is another important week for US yields with a record amount of treasury auctions as well as inflation data on Wednesday

Drivers


As we pointed out yesterday the NFP print was weak enough to keep the US in a goldilocks scenario where monetary and fiscal policy can remain loose.  The Fed’s Barkin joining the chorus of more dovish FOMC members from last week.  He said they need to focus on being supportive and is more concerned with medium term inflation expectations than short term price volatility.

The US inflation data on Wednesday will be important.  If it comes in too strong it could reignite tapering concerns and lead to a stronger USD and risk off moves.  If it’s in line or weaker the current trends can continue.  We will also hear from Powell on Wednesday.

Overall, the reflation trade is back, and the market seems comfortable getting back on the USD trend lower and risk higher trades. There is some concern about vaccine resistant strains of the virus but so far vaccines are effective enough for it not to be too concerning.

We are generally expecting the market to continue buy growth currencies and sell the EUR, JPY, CHF and the dollar as it is back to its trend lower after position reduction last week.


Numbers to Watch


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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