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Daily market commentary: Risk is on and the dollar continues to fall



FOREX

Risk is on and the dollar continues to fall. The Dollar Index is trading at a 17-month low as investors continue to price-in the recent vaccine successes, the unwinding of political uncertainty in Washington and expectations of further Fed easing. Since March this year, when the financial markets experienced peak coronavirus-anxiety, the index measuring the performance of the greenback dropped almost 11% in a trend that may entail further weakness. The prospect of an economic rebound in 2021 means investors are abandoning the safe haven dollar and seeking greater growth opportunities in riskier assets.

Ricardo Evangelista – Senior Analyst, ActivTrades

daily market analysis

GOLD

Despite the new week starting with stock markets in red, gold has so far been unable to rebound. The short-term trend for bullion has been compromised by the price falling through the support level at $1,850. Investors have moved to other assets, seeking faster gains, although they haven’t forgotten that central banks will be forced to print money for many years to help the economy to recover from the Covid-19 crisis.

From a technical point of view, the price has now found a support level at $1,780. The next support zone is placed at $1,750, while the following one would be between $1,690 and $1,700. It will be interesting to see investors’ reaction once stock markets correct, as this could potentially trigger new buyers to rediscover gold.

Carlo Alberto De Casa – Chief analyst, ActivTrades 

EUROPEAN SHARES 

Stock markets opened lower in Europe, as risk appetite wanes on the last trading day of the month. Investors are choosing to temper their exposure to risky assets following a 13% rally on equities in November and ahead of another busy week of macro news. Energy shares are leading declines this morning after OPEC failed to decide on oil supply ahead of today’s full virtual meeting. Elsewhere, banking and small caps are also among the worst performers with investors taking some profit following this month’s rally and prior to this week’s busy agenda with the US NFP looming on Friday. In the meantime, tech shares have shown more resilience on Cyber Monday. Today’s pull-back is more likely to be “technical” than really threatening to markets as the global economic recovery remains on track and confirmed vaccines keep on lifting long-term uncertainty. With that in mind, there is a high chance that investors will rely on macro news to adjust their trading strategy until the end of the year. More market volatility is expected on oil markets today with a possible agreement from the OPEC meeting on oil output, which should also have a significant impact on oil-related shares including the travel & leisure sector.

Pierre Veyret– Technical analyst, ActivTrades


Disclaimer: opinions are personal to the authors and do not reflect the opinions of LeapRate. This is not a trading advice.

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Daily market commentary: Risk is on and the dollar continues to fall

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