The Dollar Index continues to gain ground as the markets price in the shift in expectations triggered by Friday’s jobs report. The strength of the US labour market, which previously had been cited by Fed officials as a reason for concern and therefore making it necessary to hold back on any tapering, surprised to the upside and made it more likely for the American central bank to start tapering its asset purchases sooner than previously expected. This dynamic, which triggered an immediate rise in Treasury yields, is likely to continue to support the dollar, especially if Wednesday’s inflation numbers also surprise to the upside by reading above last month’s rate of 5.4%.
WTI is up by more than 1% during early Tuesday trading, recovering some of the losses of the previous session. Oil prices are likely to remain volatile as the outlook for the economic recovery becomes increasingly uncertain, with a rise in cases of the Delta variant in Asia continuing to be a reason for concern, while at the same time in the US the Senate will vote on the deployment of a massive infrastructure bill, which, if approved, will certainly increase demand for oil.
European markets edged higher on Tuesday, following a positive Asian session while US Futures lagged. This mixed international picture could be explained by a decreasing appetite for stocks in the US as investors are digesting the prospect of a hawkish shift to come from the Fed, while the situation remains dovish on the old continent. Market sentiment in Europe is being lifted today by tech and cyclical values which suggest investors remain confident about the current economic recovery despite rising virus numbers in some hotspots. One of best performers both of this week and the month as a whole is the French CAC-40 Index as the market is still trading above its 100% Fibonacci extension around the 6,800pts level. The technical outlook remains bullish so far even if the MACD indicator shows a decreasing momentum, reviving the risk of a healthy bearish correction to come following a 9-day winning streak.
Pierre Veyret– Technical analyst, ActivTrades
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Experienced writer and journalist, working in the global online trading sector, Steffy is the Editor of LeapRate. She has previous experience as a copywriter and has been with the company since January 2020. Steffy has a British and American Studies degree from St. Kliment Ochridski University in Sofia.