Market Analysis

The US dollar reached a one year high

FOREX

The US dollar reached a one year high versus the Japanese yen during early Tuesday trading. The dollar’s strength in the last couple of months results from investors pricing in a potential rise in inflation as a collateral effect of the gargantuan monetary and fiscal stimulus being deployed in the United States. However, some argue that the recent greenback gains may not last, as it is not guaranteed that prices will rise significantly and for a prolonged period of time. The Fed, at least for now, seems unwilling to change its accommodative stance, citing the country’s high unemployment rate as a sign that the recovery still has some ground to cover and that it may be too early to be fearing the overheating of the economy. Both sides of the argument will keep a close eye on the employment numbers being published this Friday, which may offer more clues on whether or not the Fed will change its current course and provide a more clearly defined outlook for the dollar.

Ricardo Evangelista – Senior Analyst, ActivTrades

Source: ActivTrader

 

GOLD
The financial environment has once again proven detrimental for gold as a mix of bearish ingredients have pulled the price down to $1,700. Indeed, the combination of a strong US dollar and expectation for rising yields, in conjunction with Joe Biden’s optimism on the vaccine rollout, have caused bullion to fall again with investors favouring bonds and stocks. From a technical point of view, the price is playing with the key level of $1,700. A crucial support is placed less than 2% below this threshold at $1,670, a recent low, while the overall scenario for gold remains moderately bearish.

Carlo Alberto De Casa – Chief analyst, ActivTrades

 

EUROPEAN SHARES 
European shares are on the rise amid renewed risk appetite despite a mixed trading session in Asia. Many investors are still trying to assess whether Archego Capital’s losses will cause contagion into other institutions. While a few fear a real systemic impact following the family office’s implosion, many others qualify this very short-term price action in the banking sector, and companies like Nomura and Credit Suisse, as mere turbulence. European benchmarks’ prices are telling us another story after trading higher almost everywhere in the region amid burgeoning appetite towards riskier assets. Indeed, the vaccine roll-out acceleration combined with the prospect of further stimulus are sustaining markets and growth, driving prices higher. The best performance so far comes from Paris as the CAC-40 Index, boosted by this morning’s French Consumer Confidence data, is now trading above 6,050pts with 6,090pts and 6,140pts now in sight.

Pierre Veyret– Technical analyst, ActivTrades

Source: ActivTrader

 

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