Notes for the Week
The U.S. Dollar is quite strong but pulled back at the end of last week following much worse than expected non-farm payrolls data which were released on Friday. Only 20,000 new jobs were added, compared to an expected 180,000. However, there is little doubt that the greenback is in a long-term upwards trend, and the Dollar usually dominates the Forex market.
The U.S. stock market, as measured by the benchmark S&P 500 Index, recovered strongly since its low just before Christmas, by just over 20% in only a few weeks, which is a strong move by any measure. However, this stock market is looking considerably more bearish now, with every day’s close last week occurring at a new low. The price is now below the benchmark 200-day simple moving average, and the average itself is flat. I don’t see this as a good market to buy stocks in yet – my stock portfolio is empty.
A little unusually, the U.S. Dollar has advanced while U.S. stocks have sold off. On the other hand, the Japanese Yen has strengthened over this period, so that currency seems to be behaving like a “safe haven”, more so than any other major currency.
European currencies are weak, with the Euro and Swedish Krona is strong long-term bearish trends. The Swedish Krona hit an all-time low against the greenback last week and may well fall further. The Euro has failed to act as a safe-haven which suggests the ECB’s new LTRO is having a dovish effect on how the market sees the Euro.
Commodity currencies are getting hit, especially the Canadian and Australian Dollars.
The British Pound is weak as Tuesday’s big Parliamentary vote on Brexit approaches. As things stand the U.K. will leave the E.U. without a deal on 29th March, but it can be expected that either a deal will be approved. or the departure period will be delayed as there is no majority in the House of Commons for a “no deal” Brexit.