Temperatures in Houston dropped to -11 on Monday, the failure to meet the state's energy needs led to permanent power outages and curtailment of shale oil production in Texas, and the largest US refinery in Port Arthur closed by evening.
As a result, crude oil futures continue to rise, Brent is trading above $63 per barrel, and obviously, this is not the limit. Expectations are positive - the expansion of vaccinations promises to open up national economies from covid restrictions, besides, OPEC + is presumably ready to maintain the current production restrictions, even despite the growth in demand.
Copper supported the positive wave and climbed to a new high since September 2012 at $8,394 per tonne. The dollar no longer benefits from the continued rise in US bond yields and growing confidence that the Senate will soon pass a $1.9 trillion fiscal stimulus package.
Dollar volatility will most likely return on Wednesday, given the large volume of macroeconomic publications. The yield on 5-year TIPS bonds continues to rise, and as of the opening of trading on Tuesday, it is already 2.35%. Inflationary expectations are very strong, which means a likely return to the dollar's growth soon.
The sharply increased interest in risk turned the situation around with risky assets, the New Zealand dollar attempted to grow, but the January maximum has not yet been reached.
Manufacturing PMI rose 9.2p in February, blocking the dip in January. The housing market is booming, and the only sector under pressure is the services sector, as tourist inflows remain close to zero and the sector's difficulties are getting less attention. The main thing is that the economy is noticeably closer to full employment than the RBNZ anticipated, and inflation expectations are close to the target, even though there are no tourists. As a result, the regional banks, analyzing the current situation, conclude that the expansion of incentives is finally removed from the agenda, and the RBNZ begins to seriously consider the scenarios for exiting the ultra-loose policy.
The target price is still below the long-term average, which suggests that the current growth is more of a technical nature and is a reflection of the general market situation than internal drivers. On the futures market, the long position remains, weekly changes are almost zero.
The fact that the target price remains below the long-term may indicate that the current rally is just a pullback to the highs for the formation of a second peak at best, and not as a resumption of a bullish trend. We expect that the decline will resume as soon as the demand for risk decreases, the targets are the same - 0.7000, then 0.6870/75 (23.6% of the 2020 growth).
The Aussie maintains a minimum short position (-17 million according to the CFTC report), there is no direction in futures, but a few days of positive mood on the markets did their job, and the Aussie pulled back quite high, but still did not reach the maximum. Part of the growth is definitely an external factor, but the minutes of the RBA meeting, published this morning, turned out to be mostly bullish. RBA members noted that Australia's recovery was faster than expected, investment fell less-than-expected, labor market forecasts were raised, and consumption was supported by "very strong growth in disposable income." As a result, the target price went up sharply.
At the same time, internal factors of growth are not as strong as they might seem. The RBA decided to expand the bond buyback program by another $100 billion, at $5 billion a month, after the previous program ends in April this year. This decision indicates the RBA's uncertainty about the sustainability of the current recovery.
The peak of 0.7823 is already very close, its storm, judging by the behavior of the target price, has become more probable. A breakout will bring AUD/USD back to a bullish trend, the formation of an upward and a downward reversal is no less technically justified. If the demand for risk continues, the first scenario will become more reasonable.