Markets cling to optimism
The financial markets were undergoing a big test of optimists yesterday. So far, they seem to have claimed local victory.
During the day, the Nasdaq almost fell out of its 9-month uptrend. As a week ago, it got support on a decline below 13000 and closed the day with minor growth, recovering its 2% intraday drop, gaining most of the way through the active trading session in New York.
Intraday on Wednesday, the dollar also received support from the sell-off, managing to get back above 90 on the DXY, a basket of the world’s six most popular currencies. However, the battle for this support level continues. The move will be stronger after the surrender of one side, bulls or bears.
Gold received support intraday. Once again, there has been talk of institutional investors returning to gold from bitcoin. That might well be true, as gold has returned to growth since the beginning of April, while bitcoin lost momentum in the middle of last month.
The financial markets were undergoing a big test of optimists yesterday. So far, they seem to have claimed local victory.
During the day, the Nasdaq almost fell out of its 9-month uptrend. As a week ago, it got support on a decline below 13000 and closed the day with minor growth, recovering its 2% intraday drop, gaining most of the way through the active trading session in New York.
Intraday on Wednesday, the dollar also received support from the sell-off, managing to get back above 90 on the DXY, a basket of the world’s six most popular currencies. However, the battle for this support level continues. The move will be stronger after the surrender of one side, bulls or bears.
Gold received support intraday. Once again, there has been talk of institutional investors returning to gold from bitcoin. That might well be true, as gold has returned to growth since the beginning of April, while bitcoin lost momentum in the middle of last month.
#WaveAnalysis
#AUDUSD reversed from support level 0.7700
• Likely to rise to resistance level 0.7845
https://fxpro.news/technical-analysis/audusd-wave-analysis-20-may-2021-20210520/
#AUDUSD reversed from support level 0.7700
• Likely to rise to resistance level 0.7845
https://fxpro.news/technical-analysis/audusd-wave-analysis-20-may-2021-20210520/
#WaveAnalysis
#DowJones reversed from support level 33500
• Likely to rise to resistance level 35000
https://fxpro.news/technical-analysis/dow-jones-wave-analysis-20-may-2021-20210520/
#DowJones reversed from support level 33500
• Likely to rise to resistance level 35000
https://fxpro.news/technical-analysis/dow-jones-wave-analysis-20-may-2021-20210520/
What does waning inflation panic mean for Techs and the Dollar?
The idea of temporary inflation seems to be creeping into the minds of the financial community, helping to calm interest in commodities.
Lower inflation fears potentially mean stronger support for growth versus value stocks, providing an advantage for the Nasdaq over the Dow Jones. In confirmation of market participants’ optimism, from the side of tech analysis, we now see a test of the 50-day average by the Nasdaq100 and a bounce out of the oversold RSI area, which also indicates that the sell-off is over and buying recovery is underway.
The idea of temporary inflation seems to be creeping into the minds of the financial community, helping to calm interest in commodities.
Lower inflation fears potentially mean stronger support for growth versus value stocks, providing an advantage for the Nasdaq over the Dow Jones. In confirmation of market participants’ optimism, from the side of tech analysis, we now see a test of the 50-day average by the Nasdaq100 and a bounce out of the oversold RSI area, which also indicates that the sell-off is over and buying recovery is underway.
#WaveAnalysis
#WTI reversed from support level 62.00
• Likely to rise to resistance level 66.80
https://fxpro.news/technical-analysis/wtiusd-wave-analysis-21-may-2021-20210521/
#WTI reversed from support level 62.00
• Likely to rise to resistance level 66.80
https://fxpro.news/technical-analysis/wtiusd-wave-analysis-21-may-2021-20210521/
#WaveAnalysis
#EUR50 reversed from support level 3900
• Likely to rise to resistance level 4050
https://fxpro.news/technical-analysis/eur50-wave-analysis-21-may-2021-20210521/
#EUR50 reversed from support level 3900
• Likely to rise to resistance level 4050
https://fxpro.news/technical-analysis/eur50-wave-analysis-21-may-2021-20210521/
China’s rush to cool overheated markets creates caution
China officials are promising harsh penalties for price rigging and spreading misleading information on spot and futures commodity markets after a meeting with steel chiefs at the weekend. This is a new move to cool the boom in raw prices.
In the 2000s, China was also a deflationary exporter due to cheap labour and economies of scale. But that was natural end-price deflation. Now the Politburo is aiming to control prices in the earlier stages.
There is also no getting around the psychological effect: overheated commodity markets are shrinking from so much regulatory scrutiny from one of the largest and fastest-growing raw material and energy consumers.
The currency market is not giving clear signals either. USDCNH and AUDUSD have stabilised in narrow ranges near recent extremes.
EURUSD has been gaining support on the downside towards 1.2160 since last week and is not giving up any sustained attempt to move above 1.2200.
China officials are promising harsh penalties for price rigging and spreading misleading information on spot and futures commodity markets after a meeting with steel chiefs at the weekend. This is a new move to cool the boom in raw prices.
In the 2000s, China was also a deflationary exporter due to cheap labour and economies of scale. But that was natural end-price deflation. Now the Politburo is aiming to control prices in the earlier stages.
There is also no getting around the psychological effect: overheated commodity markets are shrinking from so much regulatory scrutiny from one of the largest and fastest-growing raw material and energy consumers.
The currency market is not giving clear signals either. USDCNH and AUDUSD have stabilised in narrow ranges near recent extremes.
EURUSD has been gaining support on the downside towards 1.2160 since last week and is not giving up any sustained attempt to move above 1.2200.
#WaveAnalysis
#Tesla reversed from support level 550
• Likely to rise to resistance level 630
https://fxpro.news/technical-analysis/tesla-wave-analysis-24-may-2021-20210524/
#Tesla reversed from support level 550
• Likely to rise to resistance level 630
https://fxpro.news/technical-analysis/tesla-wave-analysis-24-may-2021-20210524/
It is very likely true that Americans are in no hurry to look for a new job, receiving increased benefits and still having a record cushion of cash. But do not assume that Americans have become unusually lazy over the past year, as many simply do not have the opportunity to go to work due to pandemic-related restrictions.
Some parents look after their children at home, while schools and kindergartens remain closed. Increased payments and accumulated cash from government cheques allow people to stay out of work longer. Without them, people would look for work more actively (i.e. they would be quicker to accept employers' offers).
But it would be a blow to American spending, which would hurt the US economy even more.
The US now has record retail sales and record savings, with employment 8 million below pre-pandemic levels and weekly benefit recipients above March 2020 levels. This is only possible because of the government's boost.
Some parents look after their children at home, while schools and kindergartens remain closed. Increased payments and accumulated cash from government cheques allow people to stay out of work longer. Without them, people would look for work more actively (i.e. they would be quicker to accept employers' offers).
But it would be a blow to American spending, which would hurt the US economy even more.
The US now has record retail sales and record savings, with employment 8 million below pre-pandemic levels and weekly benefit recipients above March 2020 levels. This is only possible because of the government's boost.
Fed speakers press on the dollar, boosting Techs & commodities
Fed officials continue to extinguish the inflationary panic and help markets return to last year’s major trends.
Gold looks short-term overbought, having climbed above 70 in the RSI on the daily charts. In the near term, we might well see a consolidation near the current levels with the range of $1844 (200-day moving average) and $1900, an important round level, and the historical high area of 2011.
Looking beyond short-term fluctuations, it makes sense to remain bullish on commodity assets. The Fed’s reluctance to fight the first signs of inflation is fertile ground for higher prices.
In addition to gold, oil is also worth watching: Brent is once again close to $68.50, an area of highs in the last two years. A move above $70 could see the bears capitulation.
Fed officials continue to extinguish the inflationary panic and help markets return to last year’s major trends.
Gold looks short-term overbought, having climbed above 70 in the RSI on the daily charts. In the near term, we might well see a consolidation near the current levels with the range of $1844 (200-day moving average) and $1900, an important round level, and the historical high area of 2011.
Looking beyond short-term fluctuations, it makes sense to remain bullish on commodity assets. The Fed’s reluctance to fight the first signs of inflation is fertile ground for higher prices.
In addition to gold, oil is also worth watching: Brent is once again close to $68.50, an area of highs in the last two years. A move above $70 could see the bears capitulation.
Germany's Ifo Business Activity Index rose in May to 99.2 from 96.6 a month earlier and growth expectations to 98.2. These are the highest index values in two years, largely due to an improvement in the expectations of German businesses.
The Ifo economic expectations index reached 102.9, surpassing the cyclical highs of 2017 and 2014 to the highest levels since the beginning of 2011. The publication's commentary notes an acceleration in economic growth. Amongst economic sectors, the most significant progress is noted in trade.
The Ifo economic expectations index reached 102.9, surpassing the cyclical highs of 2017 and 2014 to the highest levels since the beginning of 2011. The publication's commentary notes an acceleration in economic growth. Amongst economic sectors, the most significant progress is noted in trade.
Interestingly, the markets in Europe are now dominated by the opposite movement. Strong Ifo data triggered profit-taking rather than boosting buying. EURUSD was trading above 1.2260 even before the publication, pulling back 20 pips in the first minutes afterwards. The same goes for the DAX30 index, which made new highs just after the disappointing final GDP figures for the first quarter but went down on the optimism of the business indicator.
Short-term traders should still be cautious about playing against the prevailing euro and equity trend. Short-term fixing will likely be followed by renewed buying of EURUSD, directing the pair to a retest of the year's highs at 1.2350.
Short-term traders should still be cautious about playing against the prevailing euro and equity trend. Short-term fixing will likely be followed by renewed buying of EURUSD, directing the pair to a retest of the year's highs at 1.2350.
#WaveAnalysis
#ChinaA50 broke key resistance level 17600
• Likely to rise to resistance level 18625
https://fxpro.news/technical-analysis/chinaa50-wave-analysis-25-may-2021-20210525/
#ChinaA50 broke key resistance level 17600
• Likely to rise to resistance level 18625
https://fxpro.news/technical-analysis/chinaa50-wave-analysis-25-may-2021-20210525/
#WaveAnalysis
#Platinum reversed from support level 1173
• Likely to rise to resistance level 1275
https://fxpro.news/technical-analysis/platinum-wave-analysis-25-may-2021-20210525/
#Platinum reversed from support level 1173
• Likely to rise to resistance level 1275
https://fxpro.news/technical-analysis/platinum-wave-analysis-25-may-2021-20210525/
Dollar back to year’s lows and aiming even lower
The Fed’s Vice-Chairman Richard Clarida reassured that the regulator could overcome the spike in inflation and provide a “soft landing” without breaking economic growth. People with experience in the markets may remember that the Fed said the same things about 15 years ago, intending to cool the housing boom and overheated economy.
Without going into assessments of the correctness of such a policy in the long run, it is worth remembering that those years were accompanied by a strong recovery in stock markets and pressure on the dollar.
The Fed’s Vice-Chairman Richard Clarida reassured that the regulator could overcome the spike in inflation and provide a “soft landing” without breaking economic growth. People with experience in the markets may remember that the Fed said the same things about 15 years ago, intending to cool the housing boom and overheated economy.
Without going into assessments of the correctness of such a policy in the long run, it is worth remembering that those years were accompanied by a strong recovery in stock markets and pressure on the dollar.
US crude oil inventories declined last week, stronger than forecasted, by 1.66M barrels. To the same week a year ago, inventories were 9.4% lower. While commercial storage remains high by historical standards, Strategic Petroleum Reserves continue to decline, reaching their lowest level since October 2003.
Interestingly, production has persisted at 11m b/d since last July. The doubling of the number of oil rigs in the previous eight months has so far only helped maintain the status quo in production.
On the one hand, this is potentially good news for oil and removes the risks of oversupply of black gold. But, on the other, this data is not strong enough to break bearish resistance in the area of 2-year highs in Brent and WTI.
Interestingly, production has persisted at 11m b/d since last July. The doubling of the number of oil rigs in the previous eight months has so far only helped maintain the status quo in production.
On the one hand, this is potentially good news for oil and removes the risks of oversupply of black gold. But, on the other, this data is not strong enough to break bearish resistance in the area of 2-year highs in Brent and WTI.
#WaveAnalysis
#EURUSD reversed from resistance level 1.2250
• Likely to fall to support level 1.2160
https://fxpro.news/technical-analysis/eurusd-wave-analysis-26-may-2021-20210526/
#EURUSD reversed from resistance level 1.2250
• Likely to fall to support level 1.2160
https://fxpro.news/technical-analysis/eurusd-wave-analysis-26-may-2021-20210526/