European equities and the UK’s FTSE are all pointing to higher highs today following on from the strong opening by the Nikkei 225. The Nikkei’s bullish rise is in line with the global indices but got a further boost of positivity from the news that the Pfizer vaccine has been approved for use. Traders sentiment is being supported by their expectations on stimulus and the positive results from the mass vaccinations against covid-19 across the globe as we all want to see the economies fully re-open asap.
As the Nikkei rises and US dollar falls, it is interesting to see the move from safe havens like the yen and find the USDJPY continuing the bullish momentum seen in the last weeks trading. Today’s action took out the bearish momentum range printed on the 9th of February and this move now opens up the previous swing highs prices towards 105.80.
Cable is finding buyers just under 1.3910 having tested only 20 pips lower in the first few hours of regular trading this morning. Last week was quite range bound following Mondays positive move higher, so after that compression an expansion up to prices last seen in 2018 now looks very likely. Support on the Daily time frame comes in at the 20-period moving average which is currently trading 1.3730 and last week’s swing low of 1.3775. A lot of this bullish sentiment that is leading to continued bullish momentum is based on how well the UK government are vaccinating the vulnerable having jabbed the 15mln people they set out to by mid-Feb, but also due to the downturn in the US dollar.
A long with cable, the USDCAD is showing that weaker US dollar prices is a boost to the Oil complex and in turn the Canadian dollar. Though both the USA and Canada are generally away from their trading desks as they celebrate their own bank holidays, the Loonie is breaking lower and looking like it wants to test the January 2021 low print.
Precious metals are a mixed bag currently with the Gold/Silver ratio continuing to fall below 66 and looking quite likely to test the recent low of 62.50. Silver prices outpacing Gold is quite unusual but not unheard of, and the diminishing purchasing power of the US dollar and rising expectations in inflation would have us assume that both silver and gold would catch a bid. The fact that neither have a yield could mean that gold is being sold in favour of putting cash to work elsewhere in the markets during these times of relative stability. Hence why we see hot money follow further into the equities space.