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Daily market commentary: the Dollar Index is ending the week having given up all those gains



FOREX

Despite rising on Wednesday, following the publication of the last FOMC meeting minutes, the Dollar Index is ending the week having given up all those gains. Many investors appear to have suffered a moment of confirmation bias, when they read in the minutes that the central bank may need to discuss the size of asset purchases in future meetings, immediately pressing the ‘buy dollar’ button, assuming it was the Fed’s first sign of being ready to start tapering its accommodative policies. However, that doesn’t seem to be the case, with several central bank officials subsequently speaking about the need to maintain the current stance until the economy is fully back on track. As things stand, despite the discussions about the real scope of the threat posed by inflation, the Federal Reserve is not wavering in its commitment to turbo-charge the recovery and that may mean further dollar weakness ahead.

Ricardo Evangelista – Senior Analyst, ActivTrades

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GOLD

Gold is steady just above the threshold of $1,870. The modest gains seen this week should be considered in a bigger picture, as it is the third week in a row in green for bullion. The main trend is still positive with investors buying gold on the weakness of the dollar and as a safe haven in case there is a sustained period of inflation.

Carlo Alberto De Casa– Chief analyst, ActivTrades

EUROPEAN SHARES 

Shares traded slightly higher everywhere in Europe on Friday, extending yesterday’s gains after Wall Street’s trading session. While inflation concerns continue to linger in investors’ minds, most traders have been temporarily and paradoxically reassured by the recent batch of poor US macro data. The fact the last macro figures aren’t aligned and that they show an uneven recovery is likely to keep the stimulus policy from both central bankers and governments alive for some more time. That said, the general trading stance is likely to stay bullish as long as investors will have most central banks artificially sustaining markets everywhere, even if tapering and decreased stimulus debate loom in the mid-term. Meanwhile, investors are likely to be cautiously listening to ECB President Christine Lagarde speech due later today ahead of the meeting of eurozone finance ministers and central bankers over the weekend which could provide new market drivers.

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: the Dollar Index is ending the week having given up all those gains

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