Now on its fourth consecutive session in the green, the US dollar continues to gain ground on other major currencies during early Thursday trading, as rising Treasury yields triggered an increase in demand for the greenback. These gains are justified by the growing confidence of investors in a rosier future for the American economy, fuelled by the promise offered by President Biden’s stimulus plan and by encouraging private sector employment numbers published on Wednesday, that showed a recovery in new jobs added during January. More employment data will be published later today and tomorrow; should it support the current optimism, demand for the dollar is likely to remain high, with the Federal Reserve coming under pressure to start reviewing its current dovish stance.
Gold is extending its loss in the general risk on scenario with investors betting on riskier assets, trying to achieve quicker gains. Moreover, the US Dollar is continuing to recover, and this is causing the bullion price to decline. Growing expectations about a relatively quick end to the pandemic are raising hopes on the economic recovery hopes and with it the likelihood of central banks reducing the current hyper-dovish monetary stimulus.
Ten months ago, WTI plummeted to -$37 per barrel. Now it is trading around $90 higher even though the pandemic hasn’t ended. Investors are betting on a relative quick economic recovery, supported by central banks’ stimulus, and this has further lifted the oil price in the last few hours, marked by a general risk on sentiment on markets. From a technical point of view, the clearing of $54 has opened spaces for new rallies, as the scenario remains supportive for WTI, which just reached a 12-month-high.
Carlo Alberto De Casa – Chief analyst, ActivTrades
The hesitant trading mood at the end of the US session yesterday has weighed on Asian shares overnight and led to a mixed opening on European markets this morning. Everything started yesterday with rising international trade worries brought by Gina Raimondo’s hawkish tone towards Chinese companies. However, the positive economic outlook carried by the reassuring batch of macro data and corporate results is likely to sustain market sentiment in the mid to long-term. This would turn today’s mixed opening into an expected profit taking move, especially after a solid two-day rally on stocks and ahead of major macro releases (BoE’s rate decision, US jobless claims and US NFP).
The CAC-40 Index from Paris is one of the today’s best performers so far with the price challenging the main resistance at 5,588pts (61.8% retracement) as well as the last speedline. A clearing of this level would trigger a further upward move towards 5,640pts and 5,725pts by extension.
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.