Market Analysis

The dollar’s winning streak

FOREX

The dollar’s winning streak continued during early Friday trading, with the greenback reaching a fresh three-month high following Jerome Powell’s Thursday speech, in which he shrugged aside concerns related to rising treasury yields. The Chairman of the Fed dismissed the significance of the recent bond sell-off that forced a jump in yields, considering it orderly and unlikely to require the intervention of the central bank. These comments reverberated throughout the markets, with the benchmark 10-year treasury yield rising to around 1.6% and resulting in increased dollar strength.

Ricardo Evangelista – Senior Analyst, ActivTrades

 

OIL
Yesterday’s OPEC meeting did nothing to dent the good mood of investors for oil. On the contrary, the decision to maintain current production restrictions (including cuts in Saudi Arabia) has given further buying impetus to the current bullish rally. WTI has jumped to a new Covid-era record at $65 a barrel, as investors are betting on new rallies. For now oil remains traded long, although this optimism will probably need to be backed by renewed demand in the next few months.

Carlo Alberto De Casa – Chief analyst, ActivTrades


GOLD

The strength of the greenback is continuing to hit gold, which has fallen below $1,700. There is a moderate switch in investors’ portfolios, with bonds gaining quota, while interest for gold is temporarily decreasing, despite a dovish speech by Jerome Powell. The technical scenario for gold remains bearish, and so far there are no signs of an imminent rebound.

Carlo Alberto De Casa – Chief analyst, ActivTrades

 

 

EUROPEAN SHARES 
Global share markets continued to drift lower on Friday’s opening bell, with all sectors of the Stoxx-600 index in red territory, ahead of key US data. The slide continued towards riskier assets for the last trading session of the week after investors were disappointed following the lack of details from Jerome Powell about possible long-term rate tampering. With the Fed Chairman’s failure to reassure investors, inflation expectation continued to rise and pressure prices on stock markets. There is a high chance markets will remain volatile but not particularly directional prior to today’s US NFP, unemployment rates and Federal Budget, as these releases are likely to provide investors with solid indications on where the economy – and especially the labour market – is heading in the near term.

Technically speaking, most EU markets are still trading inside their consolidation pattern, in the shape of a bull flag in the case of the DAX-30 index.

Pierre Veyret– Technical analyst, ActivTrades

 

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