Market Wrap
The US dollar strength is gaining momentum against all currencies whose Central Banks have not tapered their stimulus and monetary policies this week. Which to me suggests that if the Federal Reserve were to taper, the US dollar would probably appreciate against all of the G-20. All of the major indices that I follow are down today which means, that even though US retail numbers were much better than analysts’ expectations the consumer sentiment and worries around COVID-19 are having a greater effect on the markets.
The Michigan consumer sentiment data missed the consensus falling to 80.8 from 88.5, with inflation metrics climbing to a post pandemic high of 4.8%.
See real-time quotes provided by our partner.
The US dollar index is travelling neatly higher within a tight controlled channel and the upwards pressure is weighing on the GBPUSD, EURUSD, AUDUSD and lifting the USDJPY and USDCAD.
See real-time quotes provided by our partner.
The NZDUSD is within a well-defined range but has ended the London session and week with a solid green close. The Hawkish moves by the RBNZ could set up the NZDUSD for a continued rise until the Fed make their move, which according to Fed Chair Powell is some ways off yet.
See real-time quotes provided by our partner.
Investors are also moving money into fixed income and especially the long-term maturity bonds that are encapsulated in the TLT. This week Fed Chair Powell said the central bank will continue to support the US economy until progress towards its employment goal is achieved, saying inflationary pressure is seen as temporary and that the current policy stance remains appropriate for the time being. Chair Powell also discussed the failings of crypto currencies while lauding the Stable Coins which has now been echoed by Treasury Secretary Yellen and ECB President Lagarde.
The semiconductor supply chain crunch is limiting inventory of new cars, hence why we are seeing the rising costs of purchasing second-hand vehicles. Retail sales have been bolstered by government backed stimulus plans which are now coming to an end and those with money are moving away from goods into services. But with a divide being created between those that have been vaccinated compared to those that don’t, retailers and service providers are going to have to hope that pandemic level infections do not return.
This week saw multiple new highs in the risk-on markets, so to end the week with some profit taking is understandable. The Dow Jones Industrial Average, Nasdaq and S&P500 are all still trading above their daily 20 exponential moving average and momentum + price action remains bullish.
The above chart shows the relative performance of the 3 major indices that I follow this year plus the Dow Jones Transportation Index (black) which is signalling all is not well with transport stocks. If you add in the small cap stocks that reside in the Russell 2000 the picture starts to look really gloomy. I am keeping an eye on the DJIA especially as if that fails at a daily swing low, the house of cards could tumble.
One saving grace could be that the fiscal flows stop abating when the US child tax credits are distributed and that the new stimulus keeps the equities markets head up, until the infrastructure stimulus arrives.
See real-time quotes provided by our partner.
The distribution phase in GBPUSD could be coming to a conclusion soon, as the pound drops heavily on the rising dollar but also on investors picking through the news that British Chancellor of the Exchequer Rishi Sunak is considering delaying the next United Kingdom budget announcement until the spring of 2022. The reason given so far is that the Treasury may need more time to assess the impact of the expiry of the government’s coronavirus-related economic support that is due to take place in the coming months.
A comprehensive website for traders, both experienced and new! Checkout our content and learn how to invest and speculate in the markets using margin traded products. Our team of educators has extensive experience and is here to help. Enjoy!
© 2020 YouTrading UK - Leaders in Trader Training.
Cookie | Duration | Description |
---|---|---|
__cfduid | 1 month | The cookie is used by cdn services like CloudFare to identify individual clients behind a shared IP address and apply security settings on a per-client basis. It does not correspond to any user ID in the web application and does not store any personally identifiable information. |
_wpfuuid | 11 years | This cookie is used by the WPForms WordPress plugin. The cookie is used to allows the paid version of the plugin to connect entries by the same user and is used for some additional features like the Form Abandonment addon. |
cf_use_ob | This cookie is set by the provider Cloudflare content delivery network. This cookie is used for determining whether it should continue serving "Always Online" until the cookie expires. | |
cookielawinfo-checbox-analytics | 11 months | This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics". |
cookielawinfo-checbox-functional | 11 months | The cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional". |
cookielawinfo-checbox-others | 11 months | This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other. |
cookielawinfo-checkbox-advertisement | 1 year | The cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Advertisement". |
cookielawinfo-checkbox-necessary | 11 months | This cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary". |
cookielawinfo-checkbox-performance | 11 months | This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance". |
viewed_cookie_policy | 11 months | The cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. It does not store any personal data. |
Cookie | Duration | Description |
---|---|---|
YSC | session | This cookies is set by Youtube and is used to track the views of embedded videos. |
Cookie | Duration | Description |
---|---|---|
_ga | 2 years | This cookie is installed by Google Analytics. The cookie is used to calculate visitor, session, campaign data and keep track of site usage for the site's analytics report. The cookies store information anonymously and assign a randomly generated number to identify unique visitors. |
_gid | 1 day | This cookie is installed by Google Analytics. The cookie is used to store information of how visitors use a website and helps in creating an analytics report of how the website is doing. The data collected including the number visitors, the source where they have come from, and the pages visted in an anonymous form. |
Cookie | Duration | Description |
---|---|---|
_fbp | 3 months | This cookie is set by Facebook to deliver advertisement when they are on Facebook or a digital platform powered by Facebook advertising after visiting this website. |
fr | 3 months | The cookie is set by Facebook to show relevant advertisments to the users and measure and improve the advertisements. The cookie also tracks the behavior of the user across the web on sites that have Facebook pixel or Facebook social plugin. |
IDE | 1 year 24 days | Used by Google DoubleClick and stores information about how the user uses the website and any other advertisement before visiting the website. This is used to present users with ads that are relevant to them according to the user profile. |
test_cookie | 15 minutes | This cookie is set by doubleclick.net. The purpose of the cookie is to determine if the user's browser supports cookies. |
VISITOR_INFO1_LIVE | 5 months 27 days | This cookie is set by Youtube. Used to track the information of the embedded YouTube videos on a website. |
Cookie | Duration | Description |
---|---|---|
_gat_UA-42160853-2 | 1 minute | No description |
cf_ob_info | No description | |
CONSENT | 16 years 8 months 3 days 6 hours 2 minutes | No description |