US Open Note – Dollar charts best week of 2021; stocks, commodities under pressure
The US dollar, the world’s reserve currency, is heading for its best weekly trade in nine months buoyed by the FOMC's hawkish turn, which bolstered the outlook for the US economy and put European currencies and commodities on the back seat.
US stocks fall but tech sector holds resilientGlobal stock indices also retreated in fear of higher interest rates for US businesses in the next few years and on concerns other central banks could also follow suit, though the promising economic recovery in the US balanced selling pressures, keeping the S&P 500 comfortably above the $4,000 level and above its previous lows.
The heavy tech sector was among the beneficiaries, with the big tech names such as Apple and Facebook offsetting losses in the Nasdaq 100 and unlocking fresh record highs for the index. On the other hand, the Dow Jones was more sensitive to the monetary tightening news, stretching last week’s downfall to one-month lows.
US futures were pointing to a soft negative open until Fed Bullard’s comments on higher interest rates and upside inflation risks intensified downside pressures. Nevertheless, it is a quadruple witching day, and the expiration of stock options and futures could possibly send some shockwaves anyway.
European markets trade heavyMeanwhile in Europe, sentiment remained downbeat, with the pan-European STOXX 600 extending yesterday’s declines to one-week lows on the back of falling energy and financial shares.
The battered euro/dollar managed to slow the pace of its decline near the 61.8% Fibonacci of the latest upleg at 1.1882, though with the ECB lagging the tightening race and the pair plummeting well below its previous highs, euro bulls could have a hard time smashing king dollar and bringing the 2020 uptrend back into play, at least in the near term.
It is not all black for the euroYet, it is not all bad news for the common currency as the freefall in the Swiss franc and the weakness in the antipodeans freed some room for improvement against those rivals. Particularly, it would be interesting to see whether Euro/aussie and euro/kiwi can overcome the 200-day simple moving average for the first time in nine months and set the stage for a proper rally. Note that Eurozone flash Markit PMI figures for June are due on Wednesday.
Bank of England decides policy next weekThe UK will also release its Markit/CIPS PMI readings on the same day, and the pound may attempt to steal some ground from the dollar if the data beat expectations.
Then, the focus will turn to the Bank of England, which is scheduled to publish its policy announcement on Thursday, but no press conference or fresh projections are on the agenda. Therefore, the event could do little to boost the pound unless the Fed’s hawkish tweaks affect the BoE’s thinking, especially as growth in house prices in the UK heats up. Still, given the resurgence in virus cases, policymakers could postpone any changes in policy for now.
From a technical perspective, pound/dollar could find some shelter within the 1.3850 – 1.3800 area. Otherwise, the break below a long-term supportive trendline could pick up steam towards 1.3668.
Commodities maintain bearish moodIn precious metals, gold is struggling to heal as the 50% Fibonacci of April’s uptrend is blocking the way on the upside around $1,797.
WTI oil futures returned to the $70.00 number after hitting a fresh 32-month high of $73.96 earlier in the week. Besides the Fed, the ongoing nuclear negotiations between Washington and Tehran are another headwind for oil although some progress has been made according to officials.
Iran votes for its new president today, with polling stats favoring a hard-line candidate already targeted by US sanctions.免責聲明: XM Group提供線上交易平台的登入和執行服務,允許個人查看和/或使用網站所提供的內容,但不進行任何更改或擴展其服務和訪問權限,並受以下條款與條例約束:(i)條款與條例;(ii)風險提示;(iii)完全免責聲明。網站內部所提供的所有資訊,僅限於一般資訊用途。請注意,我們所有的線上交易平台內容並不構成,也不被視為進入金融市場交易的邀約或邀請 。金融市場交易會對您的投資帶來重大風險。
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