Looking across the global currencies we’re seeing bullish sentiment around the Japanese yen and weakness in the UK’s pound. The US dollar is also gaining against most of the majors apart from the yen, and at the time of writing the USDJPY traded, which is quite usual as we approach the FOMC meeting minutes data release tonight.
So far central bankers have re-iterated that they are seeing an uptick in global economics which correlates to the vaccine rollout and although China is still closed to the markets due to their holiday period, global trade data points to China’s growth having a positive influence across the world’s supply chains.
The US stock markets have one eye on the steepening yield curves and we’re now seeing outperformance this week from the far east with only the UK’s FTSE100 and Scandinavian indices doing best in the west. In the last 7 days of trading the Dow Jones Industrial average has outperformed the Nasdaq tech focused index as global manufacturing and US domestic manufacturing picks up. Stocks like Microsoft and Apple look likely to open lower in regular trading hours after a bearish day yesterday. Apple is now trading below the 2021 opening price as investors maybe turn to Facebook for growth after they announced they were entering the Smart Watch market.
Precious metals like Gold and Silver are both trading lower this week as investors seek yields elsewhere and a lot of the hot money may be being put to work in the crypto markets as BTC continues to make all-time highs. If the US dollar rise continues and we have found support from the 2018 lows in the US dollar index, the clearest sign of further US dollar higher prices will be a close above major swing high levels above $91.50, otherwise this could be a counter trend retracement.
A US dollar bull run would put a halt to further commodity price rises and that would be detrimental to the commodity pairs , like AUDUSD, NZDUSD and the USDCAD but currently Oil is showing no signs of a reversal lower and continues to hold above $60 for now.
We may get some news that moves the oil complex as the Saudi Energy minister spoke at the IEA/IEF/OPEC symposium today on his views around the energy outlook for the coming year. Saudi crude inventories have been declining and were at their lowest levels since 2002 at the end of last year. With a supply shortage and adverse weather in the USA, we could have a case for demand outweighing supply which would keep the price of oil supported at these 12 month highs.