FTSE100, Dax, Look Constructive, JPY Remains Weak, Crude Oil Still Performs

The trading week was marked by last weekend’s announcement that the U.S. Senate passed the new COVID-19 relief bill. The new round of stimulus moved fast as Democrats pushed for quick delivery of the new stimulus, and it will enter into force today, as the President’s signature is expected. 

This is only a formality, and the markets took the new for granted – they rallied from the opening, with Dow Jones making multiple all-time highs. Other indices followed as well, and even the Nasdaq100, which corrected the previous week, had one of its best days in months, celebrating more stimulus.

A survey in the United States showed that about $20 billion of the new stimulus would end up in financial markets. Hence, the move higher in stocks is not surprising, and it fueled a rally in other parts of the world too. For instance, the Dax in Germany broke above 14,200 and made new all-time highs despite the European economies lagging the recovery momentum seen in the United States.

Crude oil remained elevated, confidently holding above $60 and reaching as high as $68. A combination of tight supply, higher demand, and faster global recovery put pressure on the price of oil.

Gold recovered from the lows as well, a move that fuels hopes that a temporary bottom is in place. Unsurprisingly, the dollar declined as well, on the back of the renewed risk-on sentiment.

Weekly Analysis

Canadian job numbers are revealed today, one week later than usual. Normally, the jobs data in Canada is released at the same time as the NFP in the United States, but sometimes there is a week in between. The decision from the Bank of Canada this week failed to move the Canadian dollar, which remains tightly correlated to the price of oil. Perhaps the jobs data today will succeed where the Bank of Canada failed?

Besides that, traders should not have higher expectations from the rest of the trading day, as the focus shifts to the all-important Fed meeting next Wednesday. As such, the stock market’s volatility will likely drive the price action for the end of the trading week, as traders already have an eye on what the Fed might say and do.

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Disclaimer: None of the content in this article should be viewed as investment advice or a recommendation to buy or sell. Past performance/statistics may not necessarily reflect future ...

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