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Market Wrap
Market sentiment improved during the US trading session after Federal Reserve member Rober Kaplan said during an interview with CNBC that the COVID-19 Delta variant is “limiting output production”.
The chances of the Federal Reserve actually announcing the tapering of QE were therefore seen as less likely on the back of Federal Reserve member Kaplan’s comments, further perpetuating the notion is that the FED will stay the current path.
In reality, the doves may be clutching at straws here, however, the S&P 500 has eroded earlier losses and raced higher alongside other leading indices such as the Dow Jones Industrial and the Nasdaq.
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Looking more closely at what Kaplan said he noted that the big “imponderable” is path of Delta virus, and “so far the Delta virus has not had a material effect on mobility” and the FED will be watching it Delta carefully.
The big data release of the afternoon, Canadian retail sales proved to be a non-event, as the 4.2 percent reading was largely in-line with what the market had been expecting, although Canadian housing data came in worse than expected today as the housing price index recorded a modest 0.4 percent rise.
The Canadian dollar firmed after the report against the US dollar, however, with oil prices under pressure the move was seen as largely being an overdue technical correction to the multi-day price advance in the USDCAD pair.
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As mentioned earlier both Brent and Crude oil remained under intense pressure as Kaplan’s comments failed to revive the commodity sector. Silver and copper prices also consolidated around the worse levels of the week.
The US dollar index looks to be on course to close the weekly candle above the February high as the breakout above the 93.50 level. The EURUSD pair, which makes up a significant part of the US dollar basket remained under pressure and slipped close to the 1.1650 level.
European indices took their cue from the USA and ended the day in the green. The Euro Stoxx 50 led the way, naturally meaning the Ger30, ITA40, CAC40, and ESP35 closed in positive territory.
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The FTSE100 recovered back towards the 7,000 level and appeared to be closely tracking US stocks. The ongoing slump in the British pound towards the 1.3600 level was also seen as benefitting stocks inside the FTSE100.
