Daily market commentary: The US dollar is back on the front foot


The US dollar is back on the front foot, with the index that measures its performance in relation to other major currencies rising almost 0.5% during early Friday trading. These gains can, to a large extent, be attributed to rising treasury yields, with the 10 year benchmark once again approaching 1.6%, following President Biden’s signing of the American Rescue Plan late on Thursday. Many believe this stimulus package is likely to be the tipping point for the return of inflation, pushing investors into selling their low coupon bonds and driving a hike in yields, a dynamic that invariably leads to a stronger greenback. Another reason for the dollar’s dominance lies in the euro weakness that resulted from yesterday’s announcement by the ECB that the institution will increase the pace of its emergency bond purchases, in an effort to halt rising yields.

Ricardo Evangelista – Senior Analyst, ActivTrades

daily market analysis


As the week draws to an end the scenario for gold has swiftly changed, as the renewed strength of the greenback has seen a drop in the yellow metal to the key level of $1,700. Bullion has now lost almost all gains achieved earlier this week. Moreover, the bullish momentum seen on Wednesday and Thursday morning quickly disappeared. The technical scenario turned back to a bearish mode, with space for further decline to a new test on the recent low at $1,675/1,680.

We would have a first positive signal above $1,740, while the break-out of $1,675-1,680 would open space for further decline.

Carlo Alberto De Casa – Chief 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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