FxPro

2021-03-12 12:12:57 More Fed QE can lift the markets, not the relief package

Financial markets celebrated the signing of the $1.9 trillion bailout package by Biden. he Nasdaq Composite index yesterday added more than 2.5% for the second time in three days, bouncing back above 13,000. The Dow Jones Industrial Average moved further towards historical highs, gaining 0.6% on Thursday.

With the new package, the outlook promises to be even brighter, providing an additional driver for higher long-term bond yields and closing in on the moment of policy tightening.

The ECB announced that it would increase its asset purchases on its balance sheet in the coming months, which will suppress the rise in yields.

After the ECB and banks of Japan, Korea and Australia to rein in long-term rates, a similar move from the Fed becomes the most logical development.

https://fxpro.news/daily-economic-events/more-fed-qe-can-lift-the-markets-not-the-relief-package-20210312/ Open / Comment

2021-03-11 19:29:31 #WaveAnalysis

#Cotton reversed from support level 83.04

• Likely to rise to resistance level 89.06

https://fxpro.news/market-snapshots/cotton-wave-analysis-11-march-2021-20210311/ Open / Comment

2021-03-11 19:05:58 #WaveAnalysis

#DowJones broke key resistance level 32100

• Likely to rise to resistance level 33000

https://fxpro.news/market-snapshots/dow-jones-industrial-average-wave-analysis-11-march-2021-20210311/ Open / Comment

2021-03-11 17:32:24 The ECB kept key interest rates unchanged but announced a "significantly higher pace" for the pandemic emergency purchase programme. Meanwhile, it has not expanded the total size of the envelope, keeping it at 1.85 trillion.

Today's monetary policy statement reflected the ECB's reaction to rising bond yields. Although the euro first moved somewhat up from 1.1940 to 1.1970 (now it rolled back to 1.1950), we see it as moderately negative news for the euro.

The ECB quickly reacted to rising bond yields, increasing the package's size in January and today signalled faster money-printing.

This willingness to maintain the status quo in the markets will find an outlet in a weaker euro against the dollar and pound unless their central banks follow the European Central Bank's lead.

We will not have to wait long for the Fed's response, as the next meeting is less than a week away. That will determine the extent of central bank policy divergence. Open / Comment

2021-03-11 12:43:48 Unstoppable U.S. support packages dooming Dollar

Investors in the currency market are cautiously trying to gauge the effect of the new $1.9 trillion bailout package approved by U.S. lawmakers yesterday.

Earlier in December, a $0.9 trillion economic support package was approved, after $2.2 trillion in March 2020. Democrats are not stopping there, having already started work on another stimulus, this time for China’s economic fight.

The plethora of support packages increases the chances of a robust labour market recovery. However, there are no free lunches in the economy. The Government will get that money by borrowing on the markets, and it will not be easy to digest these vast sums. With initiatives already approved, the U.S. Treasury needs to attract $5 trillion to markets, and the rampant distribution of support packages promises to inflate that amount even further.

Under such circumstances, it is reasonable to expect the Fed to put its shoulder to the wheel by increasing the volume of government bond purchases. In turn, this will increase the volume of dollars in the financial system and put pressure on the exchange rate.

https://fxpro.news/daily-economic-events/unstoppable-u-s-support-packages-dooming-dollar-20210311/ Open / Comment

2021-03-10 19:59:31 #Dax broke key resistance level 14200

• Likely to rise to resistance level 15000

https://fxpro.news/market-snapshots/dax-wave-analysis-10-march-2021-20210310/ Open / Comment

2021-03-10 19:33:33 #WaveAnalysis

#EURGBP reversed from support area

• Likely to reach resistance level 0.8650

https://fxpro.news/market-snapshots/eurgbp-wave-analysis-10-march-2021-20210310/ Open / Comment

2021-03-10 18:59:55 US Consumer prices rose by 0.4% over February, and by 1.7% y/y, after 1.4% in January. The data was in line with expectations but barely relieves the main fear of the markets of price rises acceleration. Food and energy prices are pulling the index up, and clothing, healthcare products and services (ex energy) dragging in down.

Accelerating price growth at low rates undermines the dollar's value, taking real bond yields deep into negative territory. But this is a policy pursued by many central banks, so the effect is only seen in the prices of exchange-traded assets and commodities.

The lasting effect on the dollar may come from the policy divergence with other central banks. In the early 2000s, the Fed kept the interest rate lower for longer compared to others, which caused a multi-year pressure on USD. In contrast, after the global financial crisis, the Fed was the first to mark a U-turn towards policy normalisation, which predetermined the upward USD trend in 2014-2016. Open / Comment

2021-03-10 13:05:46 Market U-turn or a bump in the road down?

Stock markets returned sharply to growth on Tuesday afternoon, following shares in technology companies. A significant 20% jump in Tesla shares and a 4% rise in Apple and Amazon pulled the Nasdaq up 3.7%.

The currency market also saw a reversal in the dollar’s downward trajectory. The DXY index is down 0.3% to 92.10 after touching a 3.5-month high.

Other sectors have also seen a reversal in the recent momentum. Gold returned above $1710, rebounding from a 9-month low at $1680. On the other hand, crude oil declined for the third day.

However, traders should remain cautious as the market performance yesterday may be nothing more than a brief bump in a trend formed about a month ago.

https://fxpro.news/market-snapshots/market-u-turn-or-a-bump-in-the-road-down-20210310/ Open / Comment

2021-03-09 19:37:32 #WaveAnalysis

#GBPJPY broke key resistance level 150.00

• Likely to reach resistance level 152.00

https://fxpro.news/market-snapshots/gbpjpy-wave-analysis-9-march-2021-20210309/ Open / Comment