STATE OF THE MARKETS
Risk-on continues with caution. Nikkei (+1.73%) surged higher on Asian trading early Friday, following the lead from Dow (+0.58%), S&P (+1.04%), and FTSE100 (+0.17%) that saw investors snapped bargain stocks as ECB pledged to keep yields under control and US stimulus signed into law later. Soft demand in bonds was observed as 10Y yields climbed higher approaching 1.58% as of this writing.
Crude closed above $66.00/bl, as investors expected a robust economic recovery in second half of the year, after President Biden pledged to get major vaccination completed by May 1. Gold that climbed to as high as $1,740/oz, was met with strong supply that pushed the yellow metal lower to closed below $1,721.45, subsequently forming a bearish pin bar.
In the FX space, medium term demand for Dollar retreated as investors favored the high beta Comdolls with Swiss hedging seen across the board. Euro returned to overbid Sterling in the short-term, after ECB pledged its support to the Union economy. Risk sentiments increased with largest gain seen in the Loonie, after strong bid flooded the oil markets.
OUR PICK – No new pick.
No new pick going into weekend. Our FX risk sentiments suggested that long term investors are still skeptical of the equities rally, hence the Swiss haven hedge. ECB pledge to accelerate money supply to contain rising yields somewhat calmed investors who expect US Feds to follow suit. The new $1.9T stimulus should buoyed equities for a while as long as Feds continue its bonds repo program and willing to increase monthly purchases. At this point, we are yet to see BoJ hands in the US treasuries and this may come after the tax season ends in April.
Trades updates : MO had reached short term TP1 and broke long term downtrend line. We expect a pullback on this risk-free trade. GBP/USD had an early exit as we saw Dollar weakness started to creep in on Tuesday. Silver short-term buy limit and medium-term sell limit was not filled, but price is moving in our projected direction. COG reached short-term TP1 and stop updated to $18.40. Have a great weekend!
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