The US dollar is posting some gains against other major currencies. However, the greenback is still facing strong headwinds despite the modest comeback. Wednesday’s Federal Reserve meeting culminated with the central bank pledging to maintain its current dovish stance, and demonstrating increasing concern over the trajectory of the US economic recovery. This posture from the Fed hinted at a willingness to accommodate higher inflation, in order to stimulate the economy, meaning there may be more downside risk ahead for the dollar.
Ricardo Evangelista – Senior Analyst, ActivTrades
Gold price remains volatile. Resistance at $1,980 pulled down the spot price before it found a support zone at $1,945 to rebound to $1,960. Gold is now in a consolidation phase but the quick rebound when the price collapsed to $1,900 two days ago confirms that investors’ appetite for bullion is still significant and the main trend remains bullish, despite some traders taking profit after the massive rally of the last few weeks.
Carlo Alberto De Casa – Chief analyst, ActivTrades
European contracts traded lower on Thursday as market sentiment remains uncertain ahead of today’s slew of corporate results. The Fed’s extremely dovish tone yesterday was already largely priced in and didn’t lead to extreme price action on stock markets.
Even though Jay Powell pledged to keep the macro environment extremely accommodative using all of the tools at his disposal, it also highlighted the fact that growth is still a long way off pre-crisis levels. Investors now need to make sure the economic recovery is well on its way and that’s what makes today’s earning reports so important.
While European investors will cautiously monitor results from Airbus, Total and Vivendi, traders from around the globe will await reports from US tech giants like Apple, Alphabet and Amazon. These results are seen as key indicators and would present a serious downside risk if they were to disappoint investors.
On the flipside, positive news from these companies would certainly help sustain market sentiment, turning the recent bearish correction into the market taking a breath rather than a trend reversal threat.