EUR (1.174) ▼

▪ EUR plunged by nearly 3.0% to its lowest level in nearly five months in March due to the fresh lockdowns across Europe with France calling for a 3rd national lockdown and the continent’s slow rollout of COVID-19 vaccines. In addition, ECB's decision to accelerate the pace of its bond-buying program coupled with rising US Treasury yields, has pushed the EUR lower.

▪ Fears that the EU's economic recovery will be lagging behind the rest of other economies due to its new lockdown measures and slow vaccination program is expected to cap the upside for the EUR this month. Also, the widening differentials between US and Europe bond yields may put further pressure on the bloc's currency.

GBP (1.376) ▼

▪ GBP weaknened against the USD last month, due to a persistent rise in US Treasury Yields and disappointing UK unemployment and inflation data. The sterling retreated despite an upbeat tone by the Bank of England and a steady decline of local COVID-19 infections.

▪ GBP may continue to trade lower against the USD this month. The UK’s successful ongoing vaccination drive may be at risk amid concerns that the EU will reduce doses sent to Britain, as it struggles with its own vaccination campaign. Any significant slowdown in the UK’s vaccine distribution would weigh heavily on Cable.

AUD (0.762) ▼

▪ AUD softened on heightened US economic recovery prospect, masking the support from a stronger-thanexpected employment data and the RBA’s decision to bring forward some of its bonds purchases.

▪ AUD is expected to ease further as risk sentiment could be dampened by the US-CN trade jitters and worries over a third wave of COVID-19 infections in Europe. Nonetheless, elevated commodity prices may limit the downfall.

NZD (0.700) ▼

▪ NZD depreciated in March to a level last seen in November 2020 after the government introduced measures to cool its housing market. In addition, rising US treasury yields and the third wave of COVID-19 infections in Europe also weighed on the kiwi.

▪ NZD is expected to remain under pressure in April mainly due to rising new infections in Europe and some parts of the world, which may threaten the path of global economic recovery.

Source: Kenanga Research - 1 Apr 2021