Análisis de mercado diario

The Dollar got hammered today.

It was bullied by G10 currencies as Treasury yields lingered near their lowest level in five weeks.

In our morning report, we highlighted how strong economic data from the two largest economies in the world was likely to fuel the risk-on mood. Well, this has compounded the Dollar’s woes – further denting appetite for the safe-haven currency. The Dollar Index (DXY) has fallen to its lowest level since early March, wobbling around the 91.10 level as of writing.

With the DXY trading below the 200-day Simple Moving Average (SMA) and residing within a bearish channel, the path of least resistance points south. But it does not end here.

The MACD has crossed below the zero line which is considered bearish while prices have cut through the 91.30 support like a hot knife through butter.

A solid daily close below 91.30 could encourage a decline towards 90.80, 90.20, and 90,00 respectively.

Taking a look at the weekly timeframe, a similar picture is playing out. Things have gone downhill for the DXY since bulls failed to push prices beyond the 93.47 level. If the DXY concludes this week negative, we could see a three crows pattern formation that signals the reversal of a trend. In this case, such a development may mark the end of the bullish trend that started after prices secured a weekly close above the 91.10 lower high.

Zooming out into the monthly, April’s monthly candle could produce a bearish engulfing pattern. Such a pattern tends to occur at the start of a downtrend or to signal the continuation of the current trend. For this setup to materialise, a monthly close below 90.50 needs to be achieved.

Is there still hope for bulls?

Bulls certainly have a very steep hill to climb to reclaim back some control. If the downside momentum fizzles out around the 89.50 support level, this could provide a foundation for bulls to push prices back towards 91.00 and higher.

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.

Asian shares were mostly higher on Monday while US equity futures are trading mixed after the S&P 500 and Dow Jones closed at all-time highs on Friday.

Last week’s strong economic data from the United States and China have fueled hopes of a solid global economic recovery. Bumper corporate earnings from US banks have also injected equity bulls with enough inspiration to elevate indices to record highs. These themes are likely to support the risk-on mood despite global Covid-19 cases hitting a weekly record last week. European stocks have opened marginally higher this morning amid the market positivity and this could trickle down into Wall Street later in the afternoon.

Despite all this positivity, it does feel like a sluggish start to what should be a busy week for markets. Today, the calendar is void of any major economic releases in the United States, United Kingdom and Europe. There is little movement across currency markets at the time of writing while Gold is hovering around $1777. But given how earnings season is set to build momentum through the week and major economies will release key data that could influence sentiment, things could liven up in the next few days.

Dollar still sulking

The dollar has stumbled into the new week under pressure as Treasury yields lingered near their lowest in five weeks. The greenback has weakened against most G10 currencies this morning with the Dollar Index (DXY) wobbling above the 91.50 support. Since the start of April, the DXY has lost roughly 1.80% and this may continue despite the string of encouraging data from the United States pointing to an accelerated economic recovery. As investors accept the Federal Reserves' vow to keep an accommodative monetary policy stance until it sees stronger employment and inflation, dollar bears might remain in the driving seat.  With the DXY trading below the 200-day SMA and respecting the bearish trend, further downside could be on the cards. A solid breakdown below 91.50 should open the doors towards 91.30 and 90.80.

Commodity spotlight – Gold

Gold drew ample strength from falling Treasury yields and a weaker dollar last week. The commodity is up over 4% this month and has the ability to push higher amid rising tensions between the United States and Russia. However, gold bears could still make an appearance as economic data from the two largest economies in the world remains highly encouraging and may boost global sentiment. If risk-on becomes the name of the game, it could hit appetite for safe-haven gold.

Looking at the technical picture, gold bulls are back in town and look to have an appetite for $1800.

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.

The reflation trade is in full effect at the moment as encouraging vaccine news, accommodative economic policies and better-than-expected earnings are all contributing to the positive mood. In fact, global stocks have now reached a thirteen-day winning streak, the longest since 2003. Asian equity markets surged northwards overnight with the Nikkei hitting multi-decade highs once more above 30,000. European markets are consolidating their hefty gains from yesterday, as traders await the opening of US indices after the public holiday on Monday. Futures are pointing to a modestly higher open and more new highs.

Bond yields screaming higher

This environment is notably bad for bonds and US 10-year yields have burst through 1.25%, with the March liquidity squeeze top at 1.27% now on the radar. The divergence between rising inflation expectations (more than 2%) and subdued real yields (-1%) remains, which means the dollar is also struggling. It now looks to have lost near-term support around 90.26 and is heading towards key January lows around 90. The risk-on theme looks set to continue with cyclical commodity FX topping the major currency charts this month.

UK assets in favour

One market standing out currently is the FTSE 100 which is up more than 5.6% this month. With the Brexit risk premium gone and the impressive rollout of Covid vaccines (23% of the UK population have now received a dose of Covid vaccine), UK indices, which have been undervalued for some time, are now gaining momentum. Of course, the FTSE is being helped by the fact that it is top heavy with “value stocks” in banking, energy and mining sectors which investors are leaping into on the back of the healing global economy.

Technically, the index is still below pre-pandemic levels and even the highs from January just above 6,900. Consolidation today is a positive phase for the market after such a big move yesterday, and before it can push to new year-to-date highs. Momentum indicators are not overbought and if prices can hold above the 100-week moving average, then its full steam ahead to 7,000 and beyond the 200-week moving average.

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.

The mood across financial markets has been lifted by renewed optimism around more US fiscal stimulus and a general positive earnings picture.

It looks like last week’s retail trading frenzy which triggered explosive levels of volatility in heavily shorted shares have somewhat stabilized, essentially adding to the overall optimism across markets. Given the semblance of stability, investors are redirecting their focus back towards fundamentals with the spotlight shining on Joe Biden’s $1.9 trillion stimulus relief package. With Senate opening a debate on a budget resolution for the 2021 fiscal year, this has raised hopes that Biden's stimulus package could pass with a simple majority. 

Elsewhere, Asian shares were mixed this morning thanks to disappointing data from China. European stocks may open higher amid fiscal hopes and progress in the global vaccine roll-out programmes. The S&P 500 and Nasdaq climbed overnight following better than expected revenues from tech giants Alphabet Inc. and Amazon. When factoring in the improving market mood and the fact that US futures are green, Wall Street is positioned to open on a positive note.

While risk-on seems to be the name of the game this week, the coronavirus menace, possible complications with the vaccine rollouts and rising infections may create obstacles down the road for global equity bulls.

Dollar steady ahead of ADP 

The main risk event for the dollar today will be the ADP private employment report. Markets are expecting roughly 49,000 jobs to have been added in January compared to December’s reading of -123,000. A disappointing report may strengthen the argument for US fiscal stimulus – ultimately weakening the US Dollar.

Looking at the technical picture, the dollar index continues to push higher on the daily charts with prices trading above 91.00 as of writing. Bulls could aim for 91.25 in the short term with 92.00 looking like a longer-term target. Should 91.00 prove to be unreliable support, the DXY could sink back towards 90.50.

Oil bulls are back in town 

Oil climbed to the highest level in over a year as tightening global supplies aided the commodity’s virus- recovery rally. 

Later today, a panel that oversees OPEC’s strategy -- the Joint Ministerial Monitoring Committee will meet online to assess the outlook.

The JMMC is unlikely to recommend new policies until the next fill OPEC+ meeting in early March. However, any fresh insight on the outlook for Oil may move prices.

Bulls are finding support from the massive drawdown in crude oil inventories which brightened the demand outlook. But rising coronavirus cases, hiccups in the vaccine rollouts across the globe, lockdown restrictions, and a possible delay in the US stimulus package may threaten upside gains.

Commodity spotlight – Gold 

Gold remains a fierce battleground for bulls and bears.

Over the past few weeks, the precious metal has struggled to break away from the sticky $1850 thanks to conflicting themes.

Given the extraordinary and utterly shocking events witnessed across financial markets, gold has the potential to shine in the week ahead as investors watch the show from a safe distance. Other key factors impacting Gold revolve around the Dollar’s performance, Covid-19 developments and US jobs report.

Talking technicals, it will be interesting to see whether prices can break away from the $1850 regions this week.

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.

Risk-on remains the name of the game as investors across the globe soak up all the good news!

A raft of positive vaccine developments, better-than-expected U.S economic data and much-needed clarity on the formal transition of leadership to president-elect Joe Biden have elevated investor sentiment. The current mood across markets is so positive that global equities are on course for their best month on record with the Dow Jones Industrial Average breaking through 30,000 for the first time.

It did not end here. The S&P 500 recorded a record close, rising 1.6% to 3,635.41 while the Nasdaq Composite added 1.3% to finish its trading day at 12,036.79. Stocks in Asia jumped on Wednesday amid the risk-on mood and this infectious optimism may support European markets later in the morning.

With global equities bulls dominating the scene and all the encouraging news stimulating appetite for riskier assets, what could possibly go wrong as 2020 slowly comes to end? Well…surging coronavirus cases across Europe and the United States remain key themes that continue to strain risk sentiment. In the United States, Democrats and Republicans have been at a stalemate for months over a new stimulus package - this could rollover into 2021. While markets may push higher in the short term, the medium to longer-term outlook remains clouded by COVID-19 & U.S. stimulus stalemate.

Enough of the fundamentals, it's time for some technicals and potential trading setups.

Dollar Index wobbles above 92.00.

The title says it all. There is no love for the Dollar thanks to the improving market mood. A solid daily close below 92.00 could open the doors towards 90.

EURUSD presses against 1.1900

The EURUSD is trading marginally below the 1.1900 resistance level. A solid breakout above this point may spark a move towards the 1.2000 support level.

GBPUSD firmly bullish above 1.3300

Pound bulls remain in control above the 1.3300 support level. A solid breakout above 1.3400 could open the doors towards 1.3482.

Gold crashes into $1800 support

After many weeks of trading within a wide range, Gold has broken below the $1850 support level. Prices are heavily bearish with all eyes on the psychological $1800 level. A solid breakdown below this point could trigger a selloff towards $1760. If $1800 proves to be reliable support, prices are likely to rebound towards $1815 and $1850.

S&P 500 bulls in the driving seat

The S&P 500 has scope to push higher if the 3550 higher low proves to be a reliable support level. Prices are trading above the 20 SMA while the MACD trades to the upside. It will be interesting to see whether the Index will hit a fresh all-time high.

Bitcoin tops $19,000

Who let the Bitcoin bulls out? The cryptocurrency has risen above $19,000 for the first time in nearly three years! This is less than $1000 away from its all-time high. Given how prices were trading below $5,000 as recently as March, bulls deserve a pat on the back. A solid weekly close above $19,000 could open the doors back to all-time highs.

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.