Strong U.S. Dollar, Weak JPY And CHF, Bullish Equities – Main Themes In March 2021

March 2021 is about to end today, and with it, so does the first quarter. As this is Easter weekend and so there is a bank holiday in much of the developed world next Friday and the upcoming Monday, the markets are likely to continue moving in the same direction. 

The stock markets had a good month, led by the U.S. indices. Despite the weak close in February, the indices recovered, and the Dow Jones made several all-time highs in March. It is hard to argue against such bullishness, considering that no index corrected more than 20% from the highs, the minimum retracement needed for a bearish market.

March, therefore, remains in history as a good month for the U.S. stocks, but not only. European stocks also traded with a bid tone, with the clearer breakout seen on the German Dax index. Volkswagen AG, the automaker, announced its plans to expand its electric vehicles fleet and even renamed its U.S. operations suggestively – Volkswagen. The announcement triggered a massive rally in the company’s share price that pushed the Dax index higher as well.

March 2021 will also be known as the month when a ship blocked the Suez Canal for a few days, triggering severe financial losses to logistic companies and disrupting the global supply chain. The oil market reacted, and the crude oil price gained two dollars on the news, although it consolidated around the all-important $60 level.

The ECB and the Fed, the two main central banks that oversee the monetary policy in the largest economic blocs in the world, have maintained their accommodative measures. The ECB even announced an increase in the pace of its bond-buying under its PEPP program, and the euro traded in retreat ever since.

Finally, higher U.S. real rates led to a stronger dollar, especially against the JPY and CHF. As a consequence, the USDJPY traded over 110 toward the end of a month, as the bullish momentum continued.

Daily Analysis

The day ahead is marked by the ADP (private payrolls) in the United States and the crude oil inventories. However, both pieces of economic data will likely be ignored by market participants because of what is about to follow in the days ahead.

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Disclaimer: None of the content in this article should be viewed as investment advice or a recommendation to buy or sell. Past performance/statistics may not necessarily reflect future ...

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