Encouraging US jobs data (+228K) on Friday pushed indices higher. Combined with a flat unemployment rate and a reasonably subdued wages increase, fears over increasing inflation eased somewhat. Since Donald Trump’s inauguration, we have now seen 65 record highs in the Dow Jones and 58 record highs in the S+P. The rally is still on track, although there are signs that the momentum is starting to wane.
The NASDAQ though has declined for two weeks in a row, largely as investors rotate their holdings and identify that Tech stocks are least likely to benefit from a tax cut. Financials, those most likely to benefit from a tax cut are booming and remain the main catalyst for recent strength.
All in all though, it was a choppy week for investors but NFP data on Friday allayed any fears that were present earlier in the week.
GOLD remains oversold but after the experiences of last week, there is no desire to initiate new long positions at these levels. I will be looking to sell into any rallies from these levels or take a close look at the price action as we near support at 1241.
EUR/USD is expected to trade sideways and remains equidistant from our support and resistance lines. Until we move towards one or other of these levels, there is no trade.
Sterling, remains in a 14 month bull trend but is still way off the levels that we saw prior to the vote to leave the EU. Price action in the 1.3420-30 will be key and a break in either direction may confirm the immediate course of sterling
This morning we SOLD GBP/USD at 1.3421 and bought back at 1.3390 for a 31pip profit. This trade was taken 5 minutes before this mornings trade set up session and closed before we had finished transmitting.
BITCOIN Futures started trading yesterday and added volatility to the most volatile product on the market. Rallies saw BITCOIN 20% higher and traded was halted on several occasions as the trading was described as erratic. Seriously what did they expect?
Opening calls for the FTSE and DAX saw both markets higher this morning after the Nikkei225 and Hang Seng experienced good gains overnight, adding 127 and 325 points respectively.
It’s a big week for monetary policy this week as several Central Banks meet to discuss policy, most notable amongst these being the ECB and BOE on Thursday. Discussions around inflation and future guidance on interest rates will be key and will undoubtedly influence all major currencies.
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