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Market Update
The US dollar currency is notably weaker this morning as the overall downtrend in the greenback appears to be resuming, following the closely watched early month rebound. Dovish commentary from a number of Federal Reserve members during Monday’s US session has caused selling pressure towards the buck to accelerate.
Traders and investors promptly moved away from the greenback after FED member reiterated that the central bank will not be changing monetary policy anytime soon, and even amongst rising growth and moderate inflation policy members stated that the FED are committed to ultra-loose fiscal policy.
Stocks rallied sharply during Monday’s US session and are set to open higher today due to the goldilocks scenario, where bye growth in the United States is improving and the Federal Reserve continue to pump massive amount of money into the economy.
Furthermore, House Republicans raised the threshold for citizens in the United States getting $1,400 stimulus checks. With all the above scenarios, the market mood is risk-on and European equity markets are also set to open in the green.
The fastest horse in the race at this juncture is Bitcoin. The first cryptocurrency is trading higher by nearly twenty percent on the week after Elon Musk announced yesterday that Tesla has bought $1.5 billion in Bitcoin.
Monday’s announcement from Musk has propelled Bitcoin towards the $48,000 level, meaning that the cryptocurrency is knocking on the door of the psychological $50,000 level. The announcement from Tesla is a big deal for the cryptocurrency market and the overall uptrend in the market only looks set to accelerate.
Asian stock markets also took their cue from Wall Street, although the Nikkei 225 was notably muted after yesterday’s blockbuster gains. Brent crude crossed $60.00 per barrel for the first-time in over twelve months.
Gold and silver are also benefitting from the intraday weakness in the US dollar. Gold faces stiff resistance from the $1,865 level and may also be benefitting from the Lunar new year holiday where large amounts of gold purchases take place in China.
Back to the foreign exchange market, the British pound and the Japanese yen currencies are currently leading the way against the US dollar. The GBPUSD pair is trading at multi-year highs and is testing close to the $1.3800 level.
The EURUSD pair has moved above the 1.2060 level and has now broken above the neckline of a notable head and shoulders pattern. Further gains towards the 1.2100 and 1.2130 levels seems likely while bulls defend the 1.2060 level.
Upcoming News
Today the G-7 is set to meet and are expected to discuss emerging market debt, cryptocurrency taxes, and central bank currencies. Bitcoin could take a hit if a major consensus is reached on hitting crypto holders with taxes.
In terms of the economic docket today the calendar is one again fairly light. From the US, JOLTS jobs openings and the release of EIA weekly crude stocks report are set to headline during the North American trading session.
ECB member Lane is also set to speak during the US session. Any talk of the euro, and muting strength in the single currency should be closely watch. Overall, weakness in the US dollar and stock buying should continue amidst the ongoing risk-on trading environment.
