Fresh Highs As US Economic Data Fuels The Fire


Currency Markets

The US dollar is weaker through the global risk-on channel as FX traders sell the dollar, anticipating investors putting more money to work outside of the US.

I don't believe there’s a great deal of consensus out here other than a new quarter and green shoot of optimism abound with spring in the air. However, I still think the foremost opportunity in G10 FX markets will be positioning for European activity's likely recovery. Vaccinations are set to accelerate significantly in April and May, and experience suggests current lockdowns will lower COVID-19 case numbers relatively soon. Indeed, this should be positive for the EURO.

The Malaysian Ringgit

The broadly weaker US dollar should help, but significantly lower oil prices to start Q2 could cause concerns. However, more critical for the ringgit is how markets reprice expectations on the Fed and how US bond yields react. With the US 10-year treasury yield drifting lower on Monday as stocks hit record highs on the back of robust economic data, it could be a bit of an offsetting factor for the local units. 

Gold Markets

Gold is a bit stronger this morning due to a weaker US dollar and slightly easier US yields.

Gold has formed a short-term double bottom but needs to break above $1,750 before it can head higher. The metal could struggle to extend last week's recovery with the positive US NFP underpinning risk-on sentiment.

If yields start to spike again and there’s a more significant reason for them to move higher rather than lower, XAUUSD could lower. While bullion found strong hands in the $1,680s, the March lows and has been relatively bullish, it’s still far too early to determine that the trend has reversed higher. 

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