Market Analysis

The New Zealand dollar is the standout performer

FOREX

The New Zealand dollar is the standout performer of the week so far, up by more than 1.5% against its American counterpart. The strength of the kiwi arises from jobs data that surprised to the upside, showing a drop in the country’s unemployment rate to 4%. The narrative amongst central bank officials all around the world has been characterised by emphasising the weight carried by the state of the labour market when it comes to deciding on when to start tightening policies. So, the gains of the New Zealand dollar reflect the new market expectations that, in the face of the country’s hot labour market, the central bank is likely to start raising interest rates later this month, with a hike of at least 25 basis-points.

Ricardo Evangelista – Senior analyst, ActivTrades

Source: ActivTrader

 

OIL

Oil markets continue to pare some of yesterday’s losses with WTI now back above $70 a barrel. The market has successfully rebounded over its major support around $69.40 as bull traders ferociously defended the 50% retracement. However, without any major macro development, this market rebound is more of a technical correction rather than a significant directional price action. That said, even if some see the economic recovery as a solid bullish market driver, traders are likely to keep an eye on the state of US-Iran relations as well as today’s US Crude Oil Inventories before taking any significant decision. Technically speaking, WTI will have to either fall through the $69.40 support or clear the $70.50 resistance to get back to a more directional trend.

Pierre Veyret– Technical analyst, ActivTrades

Source: ActivTrader

 

 

GOLD

Gold is still trading inside its mid-term bullish channel, above the support at $1,808 as well as the 89 period Exponential Moving Average (EMA) despite an increase in risk appetite. It is not so usual to see “risk-off” assets edge higher even as stocks and other riskier assets trade near record levels as the drop in the US Dollar is supporting gold, precious metal and commodity markets as a whole. However, the boost for gold is likely driven in part by hedging as traders cover some of their exposure to stock markets. Technically, gold is still trading sideways, flirting with the support at $1,808 support and resistance at $1,815 with no signs of any bearish break-out to come.

Pierre Veyret– Technical analyst, ActivTrades

Source: ActivTrader

 

 

EUROPEAN SHARES 

Stock investors pushed EU equities higher on Wednesday, extending gains registered during the Asian session, amid renewed confidence in riskier assets brought by solid corporate results. Investors’ risk appetite is on the rise as many welcomed the tempered tone from Beijing towards tech shares, and the huge gaming industry in particular, which has contributed in lifting some of this week’s market uncertainty. Meanwhile, most companies continue to publish earning reports topping estimates which is also seen as a good sign of a robust recovery by investors around the world. With positive corporate results better than expected in an environment still supported by central banks, the trading stance remains bullish on most benchmarks. However, traders will cautiously assess today’s US ADP nonfarm employment figures and the speech by Richard Clarida, Vice Chair of the Federal Reserve, ahead of Friday’s NFP, to seek more clarity about the Fed’s next policy move.

Pierre Veyret– Technical analyst, ActivTrades

Source: ActivTrader

 

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