Daily Market Recap - Monday Market Recap

The foreign exchange market was rather quiet on Monday (US Forex traders were off work on Monday in the US due to President's Day).

The Dollar stabilized Friday against other major currencies in a market that was moving away from riskier assets and where volumes were reduced. After a week of optimism, market volatility picked up slightly on Friday, which benefited the dollar, considered a safe haven.

The Dollar remained rather robust at the start of the week and the Yen fell against the Euro and the buck. Oddly enough the Yen was the weakest against all currencies on Monday, despite reporting a +12.7% growth of the Japanese GDP in the 4th quarter of 2020, surpassing the +11% expected (which reduces the overall contraction of the Japanese economy to -4.8% in 2020).

Other than the Japanese GDP figures for Q4, the only other noteworthy macro figures released on Monday were rather insignificant and not unexpected: according to Eurostat, CVS industrial production decreased by 1.6% in December 2020 in the euro zone and by 1.2% in the EU, compared to November after increases of 2.6% in the euro zone and 2.3% in the EU in November.

The average industrial production for the year 2020 decreased by 8.7% in the euro area and 8.0% in the EU, compared to 2019. Investors will find out tomorrow morning the ZEW index of German investor sentiment as well as the euro zone Q4 preliminary GDP figure.

(Charts Source: Tradingview 15.02.2021)

Looking ahead, “The main event for the markets remains the evolution of the debates on the American economic recovery plan,” estimated Derek Halpenny, the analyst at MUFG. This giant plan of 1.900 billion dollars, accompanied by the support of the American Federal Reserve (Fed) which assured that it would keep a flexible monetary policy, should weigh on the dollar, Mr. Halpenny assures.

Disclaimer: This material has been created for information purposes only. All views expressed in this document are my own and do not necessarily represent the opinions of any entity.