Eurozone Manufacturing Growth Fastest In 3 Years

Trading 01 Mar 2021 Commentaire »

Euro area manufacturing sector expanded at a faster than estimated pace in February, which was the strongest in three years as output and new orders grew sharply and export demand picked up.

The final purchasing manager's index, or PMI, for the manufacturing sector rose to 57.9 from 54.8 in January. The flash reading was 57.7.

A score above 50 suggests growth in the sector, which expanded for an eighth month in a row.

The survey that was conducted during February 11-19 also found that acute lengthening of delivery times led to the fastest cost inflation in nearly a decade. Output prices rose at the strongest rate since April 2018.

Employment in the sector grew for the first time in nearly two years.

Business optimism hit its highest level since the series began mid-2012, on hopes of a successful roll-out of vaccination programs and a resolution to the pandemic in the coming months.

Among the big four, Germany, France and Italy saw their manufacturing PMIs hit 37-month highs in February.

In Germany, the factory PMI climbed to 60.7, which was a tad higher than the flash estimate of 60.6.

The French measure rose to 56.1, which was better than the flash estimate of 55. The Italian PMI climbed to 56.9.

The Spanish PMI rose to 52.9, the highest in seven months.

"Manufacturing is appearing as an increasingly bright spot in the eurozone's economy so far this year," IHS Markit Chief Business Economist Chris Williamson said.

"The solid manufacturing expansion is clearly helping to offset ongoing virus-related weakness in many consumer-facing sectors, alleviating the impact of recent lockdown measures in many countries and helping to limit the overall pace of economic contraction," the economist said.

Williamson pointed out that the growth spurt is bringing in supply-side challenges and higher costs.

"Prices paid for inputs are consequently rising at the fastest rate for nearly a decade, hinting at further increases in consumer price inflation in coming months, at least until supply and demand come back into balance," the economist added.

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U.S. Construction Spending Jumps Much More Than Expected In January

Trading 01 Mar 2021 Commentaire »

A report released by the Commerce Department on Monday showed U.S. construction spending increased by much more than anticipated in the month of January.

The Commerce Department said construction spending spiked by 1.7 percent to an annual rate of $1.522 trillion in January after jumping by 1.1 percent to a revised rate of $1.497 trillion in December. Economists had expected construction spending to climb by 0.8 percent.

The bigger than expected increase in construction spending came as spending private construction surged up by 1.7 percent to an annual rate of $1.160 trillion.

Spending on residential construction soared by 2.5 percent to a rate of $713.0 billion, while spending on non-residential construction rose by 0.4 percent to a rate of $447.0 billion.

The report also showed spending on public construction jumped by 1.7 percent to an annual rate of $361.5 billion, partly reflecting a 5.8 percent spike in spending on highway construction.

Compared to the same month a year ago, total construction spending in January was up by 1.0 percent.

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U.S. Manufacturing Index Rises More Than Expected In February

Trading 01 Mar 2021 Commentaire »

U.S. manufacturing activity grew at an accelerated rate in the month of February, according to a report released by the Institute for Supply Management on Monday.

The ISM said its manufacturing PMI rose to 60.8 in February from 58.7 in January, with a reading above 50 indicating growth in the manufacturing sector. Economists had expected the index to inch up to 58.8.

"Manufacturing performed well for the ninth straight month, with demand, consumption and inputs registering strong growth compared to January," said Timothy R. Fiore, Chair of the ISM Manufacturing Business Survey Committee.

He added, "Labor-market difficulties at panelists' companies and their suppliers continued to restrict manufacturing-economy expansion and will remain the primary headwind to production growth until employment levels and factory operations can return to normal across the entire supply chain."

The bigger than expected increase by the headline index came as the new orders index jumped to 64.8 in February from 61.1 in January.

The production index also climbed to 63.2 in February from 60.7 in January, while the employment index rose to 54.4 from 52.6.

The report said the prices index also surged up to 86.0 in February from 82.1 in January, which Fiore said indicates "continued supplier pricing power and scarcity of supply chain goods."

On Wednesday, the ISM is scheduled to release a separate report on activity in the service sector in the month of February. The services PMI is expected to come in unchanged at 58.7.

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*U.S. Construction Spending Jumps 1.7% In January

Trading 01 Mar 2021 Commentaire »

U.S. Construction Spending Jumps 1.7% In January

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*ISM U.S. Manufacturing PMI Rises To 60.8 In February

Trading 01 Mar 2021 Commentaire »

ISM U.S. Manufacturing PMI Rises To 60.8 In February

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UK Manufacturing Growth At 2-month High

Trading 01 Mar 2021 Commentaire »

UK manufacturing expansion strengthened marginally in February as stretched supply chains and rising costs weighed on growth.

The seasonally adjusted CIPS Purchasing Managers' Index, or PMI, rose to 55.1 in February from 54.1 in January, survey data from IHS Markit showed Monday. That was above the flash estimate of 54.9.

A reading above 50 suggests growth in the sector and the PMI has signaled growth for nine months in a row.

Output growth was the slowest in the current nine-month sequence of increase. New orders grew marginally after a slight decrease in January, due to improvement in domestic demand and export business. Employment rose at the quickest pace since June 2018.

Supply chain disruptions and raw material shortages pushed input cost inflation to its highest rate for over four years. Subsequently, output prices rose at the fastest pace since January 2018.

Business optimism rose to a 77-month high in February, with over 63 percent of companies reporting that they expect output to be higher in one year's time, the survey said.

Continued recovery from the pandemic, reopening of the global economy including less transport restriction, and reduced Brexit uncertainties boosted confidence.

Survey data were collected during February 11-23.

"With current constraints likely to continue for the foreseeable future, pressure on prices and output volumes may remain a feature during the coming months," IHS Markit Director Rob Dobson said.

"That said, improved domestic demand as lockdown restrictions ease and a further rise in manufacturers' optimism are reasons to hope brighter times are on the horizon, and have already supported a modest rebound in staffing levels since the turn of the year."

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German Inflation Accelerates More Than Expected

Trading 01 Mar 2021 Commentaire »

Germany's consumer price inflation rose more than expected in February, preliminary figures from Destatis showed Monday.

The consumer price index climbed 1.3 percent year-on-year following 1.0 percent increase in January. Economists had forecast 1.2 percent inflation. Prices rose for a second straight month.

Compared to the previous month, the CPI rose 0.7 percent in February after a 0.8 percent increase in January. Economists had expected 0.5 percent gain.

Inflation based on the EU measure of HICP was steady at 1.6 percent in February. That was in line with economists' expectations.

On a month-on-month basis, the HICP climbed 0.6 percent in February, which was slightly faster than the 0.5 percent economists had expected.

Energy prices rose 0.3 percent annually after a 2.3 percent fall in the previous month. Food prices climbed 1.4 percent following a 2.2 percent increase in January.

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Analytics and trading signals for beginners. How to trade EUR/USD on March 2. Analysis of trade on Monday. Getting ready

Trading 01 Mar 2021 Commentaire »

1-hour chart for EUR/USD


On Monday, EUR/USD went on trading lower. This move was less expected than an upward correction. In the previous article, I told you that the market is on edge now and its moves are erratic. A move downwards on Monday was triggered by other drivers than the fundamental background or macroeconomic stats. The economic calendar lacks important reports as usual on Monday. That news which became known over the weekend made the opposite impact on EUR/USD. When it comes to macroeconomic data, we will discuss it a bit later. All in all, beginners should be aware that the currency pair is making a clear-cut downward move which cannot be worked out through available technical tools. We've already discussed that every trading system focuses on a definite move (roughly speaking). There are some trading strategies which make gains in a range-bound market but fail in a trending market and vice versa.

What I suggest to beginners is an easy-to-understand system. However, it is not intended for trade under the current market conditions. In other words, in the ongoing situation we should either use different tools for analysis or wait until price moves become ordinary with corrections and retracements. Another remark is that MACD indicator is not able to discharge to zero as a nonstop downward move prevents it from doing so.

On Monday, March 1, traders got to know services PMI for the EU countries. The manufacturing index was released by the Institute for Supply Management. Bearing in mind that the US dollar was asserting strength for the whole day, we conclude that the statistics released today was neglected by the market. In fact, the reports published today were of secondary importance. Last week, a lot of market moving data were on investors' radars. So, today we can say that the market ignored weak economic data. The question is why EUR/USD carried on with its decline instead of starting an upward correction. Indeed, there were no factors to push the price further down. Today, ECB President Christine Lagarde delivered a speech, but she didn't say any market-moving remarks.

On Tuesday, the only meaningful report will be the consumer price index for the EU. However, the market is likely to take no notice of it again, unless the actual reading is much stronger than expected. In this case, the market will respond. Nevertheless, all we can do is wait for an upward retracement because there are no factors for a further decline of EUR/USD.

The following scenarios are possible on March 2

1)Long positions are out of the question for the time being. The market situation remains confusing and weird. On Tuesday, there is a strong likelihood of EUR/USD growth, but the price has overcome both trendlines. There is no new bearish trendline. Thus, it would be better for beginners to wait until the downtrend is clearly over. This could take a few days. At present, no signs are detected for an upward correction.

2)Trading lower makes sense at the moment because both trendlines have been broken. The price has already moves 215 pips downwards that suggests an upward retracement. Thus, once an upward correction is over, we will be able to monitor new sell signals by MACD indicator. Probably, a new downward trendline or a channel will have been formed by that time. Targets for short positions will depend on how deep a correction will be. I would recommend placing a Take Profit 40-50 pips away from the market entry point.

What's on the chart:

Support and Resistance levels are the levels that are targets when opening buy or sell orders. Take Profit levels can be placed near them.

Red lines are channels or trend lines that display the current trend and show which direction it is preferable to trade now.

Up / down arrows show whether the pair should be traded up or down when reaching or overcoming particular obstacles.

MACD indicator (14,22,3) - a histogram and a signal line. When they are crossed, this signals a market entry. It is recommended for use in combination with trend patterns (channels, trend lines).

Important speeches and reports in the economic calendar can greatly influence the movement of the currency pair. Therefore, during their release, it is recommended to trade as carefully as possible or exit the market in order to avoid a sharp price reversal against the previous movement.

Beginners in the forex market should remember that every trade cannot be profitable. The development of a clear strategy and money management are the key to success in trading over a long period of time.

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Canadian Dollar Advances As Oil Prices Rise

Trading 01 Mar 2021 Commentaire »

The Canadian dollar climbed against its major counterparts in the European session on Monday, as progress in U.S. stimulus package and the approval of Johnson & Johnson's single shot Covid-19 vaccine lifted oil prices.

The U.S. House passed the $1.9 trillion coronavirus relief package on Saturday. The bill now moves to the Senate, where a vote could happen as early as next week.

The U.S. FDA on Saturday authorized Johnson & Johnson's single-shot Covid-19 vaccine for emergency use, beginning the rollout of millions of doses of a third effective vaccine that could reach Americans by early next week.

Traders await the OPEC+ meeting due this week, which is likely to raise production amid falling inventories.

Analysts expect the coalition to increase output by 500,000 barrels a day next month.

The loonie edged up to 84.25 against the yen, from a low of 83.60 seen at 5:00 pm ET. The loonie may find resistance around the 86.00 level.

The latest survey from Jibun Bank showed that the manufacturing sector in Japan climbed into expansion territory in February, with a 22-month high manufacturing PMI score of 51.4.

That's up from 49.8 in January and it moves above the boom-or-bust line of 50 that separates expansion from contraction.

The loonie recovered to 1.2671 against the greenback and 0.9802 against the aussie, from its early lows of 1.2737 and 0.9863, respectively. The loonie is likely to face resistance around 1.25 against the greenback and 0.96 against the aussie.

The loonie was up against the euro, at a 4-day high of 1.5262. On the upside, resistance is likely seen near the 1.50 level.

Looking ahead, U.S. ISM manufacturing PMI for February and construction spending for January are set for release in the New York session.

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EUR/USD: euro traders confused as USD up despite improved risk sentiment

Trading 01 Mar 2021 Commentaire »


The greenback has been extending gains for the fifth consecutive session. On Monday, USDX reached new 3-week highs, having climbed above 91.1.

Surprisingly, the US dollar is rising despite the renewed demand for risk.

Investors seem to be optimistic about the recovery prospects of the US economy compared to other leading economies.

According to experts at Bloomberg, GDP in the US will exceed pre-pandemic levels by mid-2021. The successful vaccination program and the next package of stimulus measures in US are expected to boost the economic growth.

Last weekend, the House of Representatives approved a $1.9 trillion stimulus package proposed by Joe Biden.

However, the bill has yet to be passed by the Senate where Democrats gained a thin majority, while Republicans oppose the adoption of the relief package in its current form. The main sticking points are the direct payments of $1,400 to US citizens and the increase of the federal minimum wage to $15 per hour.

Reportedly, Democrats may agree not to increase the minimum wage in order to achieve overall progress.

Prospects of a big fiscal stimulus and increased government spending are putting pressure on the US Treasury bonds, thus leading to higher yields and a stronger US dollar.

Meanwhile, the euro has failed to take advantage of the improved risk sentiment.

On Monday, the EUR/USD pair climbed to 1.2100 but pulled back later in the session.

While Europe is trying to ramp up the vaccination process, it still stays far behind the United States that has added the Johnson & Johnson vaccine to its arsenal.

In addition, the ECB officials have expressed concern about rising bond yields in the EU. They fear that higher yields of the long-term bonds could undermine the European economic recovery.

Last Friday, the representative of Greece in the ECB, Yannis Sturnaras, called for increasing the pace of ECB bond purchases as part of the PEPP anti-crisis program aimed at combating the consequences of the pandemic.

The Governor of the Greek central bank thinks that at the next meeting on March 11, the Governing Council of the ECB should reconsider its approach to an unwarranted tightening of financial conditions in the EU.

This statement can be regarded as a call to accelerate the pace of the European QE program.

In general, this situation is favorable for the EUR/USD bears.

The pair is currently developing downside momentum and continues to retreat from the last week's highs of 1.2200.

The support is found at the levels of 1.2020, 1.2000, and 1.1950. If the price breaks through the 1.1950 support level, the pair may easily slide to the area of 1.1600.

Strong resistance for the pair is located at 1.2110, 1.2150, and 1.2180.

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