MARKETS KEEP ON RISING BUT…
Weekly Report: Indices, Commodities, Currencies, and Cryptos
Heavy bullish trends for the stock markets last week and in some cases with an all–time high price. At the FED session on Wednesday, nothing new was mentioned as the old commitment was repeated for low Interest Rates policy until the target at Unemployment Rate and Inflation reach. Bond yields had a mild decline so USD dropped compared to the other major currencies, after three profitable weeks. In Europe, after the Austrian Central banker Robert Holzmann’s statements that ECB considers decreasing the bond purchasing program, EUR had some profits by taking advantage of the weak USD as well.
As per the COVID-19, vaccinations carry on, lockdowns remain in most of the countries but as it seems, financial markets do not care very much about it. Many countries though, including Germany, France and Italy will accelerate the vaccination process shortly, as the 3rd wane of the pandemic is very strong.
Regarding the commodities, gold had some mild profits, oil had losses dropping below $60/barrel while Bitcoin reached the milestone price of $60,000 again.
The current week is not so heavy regarding economic news and announcements. The most important ones are the Retail Sales in Eurozone and USA, the Inflation in USA and Germany, GDP & Retail Sales in China and the Unemployment Rate in Australia.
Optimism continues until recently but clouds are beginning to gather on the horizon, whether it is about the US – China relations, rising US corporate taxation, or real Inflation, which sooner or later probably continue its upward trajectory.
Last week was significantly bullish for the US SP500 index, which closed at 4,114 points and profits exceeded 2%. It was the second consecutive week that the index has hit an all-time high, aided by the Fed’s low Interest Rate policy (announced at its meeting on Wednesday), the weak dollar, and the echo of good news from the jobs market in the USA and Biden announcements on the fiscal expansion program. Individual sectors such as that of technology strengthened even more after the underperformance that they had in previous months. This week contains the earnings announcements of several companies for the first quarter of 2021 and in case of positive results, the index may continue its upward trend. We’ll keep on opening long positions this week too.
The German index DAX30 moved in consolidation and slightly upwards last week, closing at 15,271 points with profits close to 0.5%. The index had relatively low volatility but underperformed the other Indices after outperforming in previous weeks. The trend is bullish but the big rise since November (overall performance above 32%) may lead to profit-taking and corrections. We’ll try some low-risk short positions this week.
Another week higher for the British FTSE100 index, which closed at 6,889 points and profits close to 2.3%. The weakness of GBP and the view of many analysts that British stocks are an opportunity, pushed the index upwards, surpassing the highs in the pre-COVID era. Vaccinations in the UK are going very well but the issues that have arisen with Astra Zeneca in combination with the growing problems due to Brexit may cause corrections in the index. However, the bullish trend that has started since February has not yet changed. We prefer short positions this week.
Gold closed the week at $ 1,744 with a slight uptrend, performing about 0.75%. The small decline in bond yields combined with the positive climate created in the US economy and the weak dollar favored the rise of gold. Bond yields and the USD trend are likely to continue to be a barometer for gold. Of course, lately gold has a direct competitor to inflation safe haven assets: Bitcoin. Capital transfers in Bitcoin weaken gold. For the rise to continue, it needs a dynamic break of $ 1,760 while below the $ 1,730, the range of gold prices for about two months is confirmed, between $ 1,673 and $ 1,760. Short positions is our selection for the current week.
Last week was bearish for oil, with next month futures closing at $ 59.31, with losses of more than 3%. The breakout of $ 60, which is a milestone price, is an indication on the part of sellers that after the recent decisions of OPEC to gradually increase production, they are chasing targets even close to $ 50. This fact offsets the possible increase in demand since the IMF in its recent meeting, predicts a strong recovery for 2021. US inventories announced last week were mixed: crude oil inventories down 0.7% but gasoline stocks up 1.7%. The uptrend scenario starts and activates above $ 62.25 but we prefer short positions this week.
EURUSD (Euro vs US Dollar)
Strongly bullish was the last week for EURUSD, after three bearish weeks, opening at 1.1757 and closing at 1.19. The USD appeared weak after the de-escalation of bond yields and the rally in the US stock markets. On the other hand, the euro was favored by the statements of the Austrian banker Robert Holzmann about a possible decrease of bonds purchased by the ECB, in the summer. The Fed session came as no surprise, except for the US Federal Reserve’s commitment that low Interest Rates policy will remain, along with the quantitative easing program. If the dollar continues to rise, we may see the exchange rate reach the 1.20 mark. The EURUSD has been moving between 1.17 and 1.20 for about 40 days and needs more fuel to get out of this channel. Believing that 1.20 is a realistic target, we’ll open buy positions this week.
GBPUSD (Great Britain Pound – US Dollar)
GBPUSD was bearish last week, opening at 1.3823 and closing at 1.3705. The pair dropped despite the weak dollar, as the issues of vaccinations in relation to Astra Zeneca and the apparent effects on the UK from Brexit, pushed the pound more. This week, however, many activities are opening in the UK such as pubs and gyms, given the large number of people who have already been vaccinated. If the dollar turns around and starts to strengthen, then maybe the pressure on the pair will intensify even more and below the support of 1.3670, the sellers target 1.35. Sell positions is our selection for the current week.
USDJPY (US Dollar – Japanese Yen)
We saw a strong correction for the USDJPY last week, opening at 110.62 and closing at 109.67. The de-escalation of bond yields had a catalytic effect on the exchange rate, which, however, seemed to react upwards on Friday (from low to 109), with the rise of stock Indices. The correction was large but the uptrend for the USDJPY has not yet been reversed. This is likely to happen below 108.40 but if the pair starts flirting with 110 again, the scenario of continuing the rise is strengthened. We may try opening sell positions this week on USDJPY and we may increase the size below 108.40.
EURJPY (Euro – Japanese Yen)
Third consecutive bullish week for the EURJPY, which opened at 130.12 and closed at 130.51, based on the strong euro. The pair finds for the second time a ceiling close to 130.70 and this raises concerns about the continuation of the rise. A breakout of this resistance paves the way for prices close to 133 but a return below 130 will favor sellers. We’ll try buy positions but in case of prices below 130, we may turn it to sell positions.
EURGBP (Euro – Great Britain Pound)
The EURGBP recorded its biggest weekly gain since last September, opening at 0.8504 and closing at 0.8682 (rising around 180 pips). The pound was very weak against the strengthening euro. It is indicative that this rise took back the five-week downward trend of the EURGBP. Buyers are already looking at the next target at 0.8860 but this rise does not necessarily mean that the big downtrend that started at the end of last year for the pair, has still been reversed. Sell positions is what we’ll open this week.
USDCAD (US Dollar – Canadian Dollar)
Last week was slightly bearish for the USDCAD, which opened at 1.2570 and closed at 1.2527. The weak US dollar overshadowed the fall in oil prices that pushed the Canadian currency. The news from the Canadian jobs market was also impressive as unemployment fell to 7.5% in March from 8.2% in February. However, the generally positive climate about the US economy, combined with a further fall in oil prices, could lead the exchange rate to higher levels, with the first target of buyers, the price range of 1.2650. Buy positions is our selection for the current week.
USDCHF (US Dollar – Swiss Franc)
The USDCHF dropped sharply, after seven consecutive weeks of profits. More specifically, the opening price was at 0.9424 and the closing price at 0.9245, with the weakness of the dollar evident. There has been an uptrend in the pair since the beginning of the year, which in order to be affected, we must see prices well below 0.92, while in a possible strengthening of the dollar, it is not ruled out that it will approach 0.94 again. Buy positions is what we’ll open this week.
AUDUSD (Australian Dollar – US Dollar)
Consolidative trends prevailed for the AUDUSD last week, with the pair opening and closing in the price range of 0.76 – 0.7620. The Bank of Australia kept Interest Rates unchanged at 0.1%, with a parallel commitment to keep them low until 2024. This week, Chinese GDP for the first quarter of 2021 is announced and the possible recovery of the Chinese economy after the pandemic (expectations are for an increase of 18.8% compared to last year) will be released. A possible strengthening of the US dollar, however, may further push the pair and if there is a bearish breakout of 0.7530, the way is opened for 0.74. Our selection for the current week is sell positions.
Bitcoin continued its bullish trend, for the second week in a row, closing at $ 59,979, with profits of over 3%. More and more organizations have recently adopted Bitcoin as a trading medium (PayPal, VISA, Morgan Stanley, etc.), giving more credibility. Bitcoin in recent weeks, shows signs of stabilization and maturity, without such high volatility that makes it difficult to use in many portfolios. As early as this week, Bitcoin has surpassed the $ 60,000 mark and it makes sense for buyers to be optimistic about even higher prices. We’re keen to continue opening long positions for one more week.
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