Forex Today: Risk-On Rally on Weak US, Swiss Data

Risky assets make a comeback as market sentiment improves on renewed hope of a forthcoming dovish pivot by the Federal Reserve.

   

  1. Stock markets have risen firmly as risk-on sentiment improved following the release of weaker than expected US manufacturing data raised hopes that the Fed will make a more dovish tilt. The case was further strengthened by weaker than expected Swiss CPI (inflation) data which saw a month on month decline of 0.2% compared to the 0.1% increase which had been widely expected. Most major indices have risen by more than 2% over the recent session, the notable exception being the Chinese HSI which still looks weak despite recovering slightly from its low.
  2. The Reserve Bank of Australia hiked its interest rate by 0.25% to 2.60%, but a bigger hike of 0.50% had been widely expected. The RBA implied in its rate statement that it made the lower hike because it had raised rates so quickly within a recent short period of time. The news saw the Australian Dollar weaken a little, but not by anything significant.
  3. In the Forex market, the US Dollar has begun to notably weaken, especially against the British Pound and the Euro. The GBP/USD currency pair continues to recover strongly, and is now trading above $1.1300, almost 1,000 pips higher than where it was little over one week ago. The Japanese Yen is also weak but is intermittently boosted by supportive intervention from the Bank of Japan, driving the price of the USD/JPY currency pair back below ¥145.
  4. WTI Crude Oil has continued to rise to over $84 per barrel on a rumour that OPEC will agree at its meeting later this week to slash production by 1 million barrels per day to boost prices.
  5. There will be a release today of US JOLTS Job Openings data.
  6. It is a public holiday today in China.
  7. Daily new coronavirus cases globally dropped last week for the eleventh consecutive week, giving rise to the hope that the pandemic is finally over in any meaningful sense.
  8. It is estimated that 68% of the world’s population has received at least one dose of a coronavirus vaccination, while approximately 7.9% of the global population is confirmed to have contracted the virus at some time, although the true number is highly likely to be much larger.  
  9. Total confirmed new coronavirus cases worldwide stand at over 623.6 million with an average case fatality rate of 1.05%.  
  10. The rate of new coronavirus infections appears to now be significantly increasing only in Austria, Domina, Germany, and Taiwan.  
Adam Lemon

Adam Lemon began his role at DailyForex in 2013 when he was brought in as an in-house Chief Analyst. Adam trades Forex, stocks and other instruments in his own account. Adam believes that it is very possible for retail traders/investors to secure a positive return over time provided they limit their risks, follow trends, and persevere through short-term losing streaks – provided only reputable brokerages are used. He has previously worked within financial markets over a 12-year period, including 6 years with Merrill Lynch.
Learn more from Adam in his free lessons at FX Academy

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