Análisis de mercado diario

The dollar continues to trade just above strong support as it struggles for direction amid low volatility generally in FX. President Biden is set to release a fully costed budget plan today including $6 trillion in federal spending for the fiscal year 2022 to be raised to $8.2 trillion by 2031. This will leave rather large holes in the annual budget in excess of $1.3 trillion over the next decade.

Of course, what is promised by the new administration and what gets delivered are two different things with the previous Democrat hiding in the mid-term elections after Obama became President firmly on Biden’s radar. It was noticeable that news on the size of the spending triggered a rally in industrial metals.

Vix takes another leg lower

Low volatility is hitting equity markets too with the Vix now below its long-term average. The MSCI World stock index is closing in on its all-time high from early May with higher yields and small caps especially outperforming. Those stocks tied to the reopening of the US economy did well yesterday meaning tech and the Nasdaq underperformed.

GBP rises to the top of the range

Cable outperformed yesterday with a 0.6% gain after outgoing Bank of England policymaker Vlieghe hinted at a rate hike early next year. While he did layout different scenarios for the UK economy including talking about negative rates, the market responded to the hawkish comments most as Vlieghe is typically more dovish so this may give us a sense of where the more moderate MPC member’s outlook lies.

GBP/USD resistance sits firmly around 1.42 with prices having traded in a 1.41-1.42 range over the last week or so. Consolidation near the highs, a “pause for breath” is normally constructive for bulls before an upside breakout but we do have the inflation data out of the US this afternoon to contend with. That said, base effects in the PCE spending and deflator data are well known.

On the GBP side, question marks around the grand and full reopening of the UK (economy) on June 21 may hold the final key with much speculation that it is still in the balance. EUR/GBP moved lower and is now at the bottom of the recent range with last support at the mid-May low at 0.8560 before the cycle lows below 0.85.

Exención de responsabilidad: El contenido de este artículo incluye opiniones personales, y no debe ser interpretado como asesoramiento sobre inversión personal y/o de otro tipo y/o una oferta y/o solicitud de ninguna transacción con instrumentos financieros y/o garantías y/o pronóstico de rendimiento futuro. ForexTime (FXTM), sus afiliados, agentes, directores, responsables y empleados no garantizan la precisión, validez, puntualidad o compleción de ninguna información o dato disponible, y no asume ninguna responsabilidad por cualquier pérdida que resulte de cualquier inversión realizada en base a ellos.

Equity bulls marched into the trading week with a renewed sense of vigour after last Friday’s US jobs report smashed expectations.

Although several major markets were closed on Monday due to the Easter weekend, Asian stocks flashed green while the S&P 500 and Dow Jones surged to record closing highs.

On Tuesday, the mood across Asia was mixed amid fears around a new Covid-19 variant in Japan leading to a possible fourth wave. Europe finally caught up with Wall Street as traders returned from their desks after the Easter holiday break. In the currency markets, the Euro stood tall against its major counterparts while the Dollar stabilized near an almost two-week low…

Our Chief Market Strategist Hussein Sayed made an interesting comment on the divergence between US economic growth and the rest of the developed world, which may push the Dollar higher in Q2.

In our technical outlook, we covered the Dollar ahead of the Federal Reserve minutes on Wednesday evening. The Dollar Index (DXY) later tumbled to a fresh two-week low at 92.00 following the dovish Fed minutes. According to the minutes from the March meeting, officials expressed optimism about the economy’s prospects but remained cautious over the ongoing risks posed by Covid-19. Overall, the Federal Reserve seems to be in no rush to end its ultra-accommodative monetary support.

In other news, the British Pound was the worst-performing currency this week amid concerns over the UK’s vaccine rollout. 

The currency has weakened roughly 0.7% against the Dollar, with prices trading around 1.3730 as of writing. Should the Pound extend losses in the week ahead, the GBPUSD may descend towards 1.3570. 

Thursday was another day, another record high for indices across the globe as equity bulls welcomed the dovish Federal Reserve minutes. European and UK stocks set new records while the S&P 500 notched a fresh record close.

Speaking of indices, our Market Analyst Han Tan dissected this topic with Nasdaq on the Markets Extra podcast.

Looking at commodities, Gold has retreated from its highest level this month but remains on path for its first weekly gain in three. The precious metal remains supported by a softer Dollar, falling bond yields, and fresh dovish comments from Federal Reserve Jerome Powell. 

In regards to oil, prices have shed over 3% this week as investors evaluated the rising supplies from major oil producers and possible impact on fuel demand from lockdown restrictions in Europe.

Overall, it has been a positive week for global equity markets. The MSCI ACWI index posted a new record high on Thursday. The million-dollar question is how much longer will the bull party last?

Fasten your seat belts and be prepared for potential volatility next week when the US earnings season kicks off. Keep an eye on the Covid-19 developments and lockdown restrictions across Europe. There will also be speeches from financial heavyweights and key economic data from major economies.

Exención de responsabilidad: El contenido de este artículo incluye opiniones personales, y no debe ser interpretado como asesoramiento sobre inversión personal y/o de otro tipo y/o una oferta y/o solicitud de ninguna transacción con instrumentos financieros y/o garantías y/o pronóstico de rendimiento futuro. ForexTime (FXTM), sus afiliados, agentes, directores, responsables y empleados no garantizan la precisión, validez, puntualidad o compleción de ninguna información o dato disponible, y no asume ninguna responsabilidad por cualquier pérdida que resulte de cualquier inversión realizada en base a ellos.

Which way to turn? Stocks are making new highs again with the MSCI index of global shares joining US equities in breaking records. Enthusiasm about a $908 billion US fiscal stimulus proposal and vaccine joy is making investors rush to stocks, although markets across the pond have opened up mixed as traders remain wary of near-term infection numbers in the US.

It is probably King Dollar which is more newsworthy as it plunges to new lows not seen since April 2018. With the reflation trade in full effect, the haven appeal of the world’s reserve currency is lost in a maelstrom of sell orders. US bond yields are consolidating their gains after the big move higher on Monday, as they eye up a potential smash n’ grab on the 1% level.

Are markets now jumping ahead of themselves? Such strong one-way moves around economic normalisation are concerning some, who simply remind themselves of the destruction and havoc seen earlier in the year. Yet, with new US Treasury Secretary Yellen expected to wave her magical wand, so fund managers are now the most bullish they have been since 2002 on economic growth and corporate profits.

EUR rampant

Lockdowns are still in place in most European countries and markets got a reality check with today’s release of composite data for the region’s manufacturing and service sectors. This signalled a contraction in November for the first time in five months with all the main countries similarly stuck in a rut and contracting. With the ECB meeting a week away, expectations are high that President Lagarde will present a particularly dovish statement backed up by more bond buying and stimulus measures.

When prices compress and trade in a range for some time, history tells us that the breakout when it comes will be expansive. This is exactly what we’ve seen in EUR/USD this week with the pair smashing through the 1.20 barrier and not looking back! With such a sharp move, the EUR is now in oversold territory and above its top Keltner channel and Bollinger band for the third consecutive day. Upside targets if bullish momentum does win the day will aim at the high 1.23s where prices hit resistance at the start of 2018. Support comes in at the 1.21 mark and then 1.2080.

Exención de responsabilidad: El contenido de este artículo incluye opiniones personales, y no debe ser interpretado como asesoramiento sobre inversión personal y/o de otro tipo y/o una oferta y/o solicitud de ninguna transacción con instrumentos financieros y/o garantías y/o pronóstico de rendimiento futuro. ForexTime (FXTM), sus afiliados, agentes, directores, responsables y empleados no garantizan la precisión, validez, puntualidad o compleción de ninguna información o dato disponible, y no asume ninguna responsabilidad por cualquier pérdida que resulte de cualquier inversión realizada en base a ellos.