The S&P 500 had a good week due to the impressive start of Q1 earnings and favorable inflation data. In March, the consumer price index rose 5%, lower than the previous month's 6%, and met economists' expectations.
The US Dollar index and the international environment
2021-11-09 • Updated
From the investors’ point of view, the year 2020 starts on a positive note. As Donald Trump highlighted in his shining speech in Davos on Tuesday, the United States have almost entirely reconfigured the global trade setting. Thanks to the current administration (as per Mr. Trump), the country is now in a much-improved position, in relation to other countries. US-China deal, US-Canada-Mexico agreement, other coming deals with the UK, Japan, and South Korea – all of that surely brings more certainty to the global economic vibe. Particularly, it brings more risk appetite among investors, who now prefer something more adventurous than the US Dollar. In consequence, demand for the greenback is weakening, putting it under pressure. That is exactly what the US President wants to see: as he strongly supports the US exports, depreciation of the USD benefits American exporters. Hence, the question is, how long the environment will be reassuring enough to keep investors away from the US dollar, favoring US merchandise and services sold abroad, to the lasting joy of Donald Trump.
US Dollar Index
Since Summer 2018, the US Dollar index has been showing a rising trend, due to the US-China trade conflict and other negative influence factors arising in the midst of this trade war. Altogether, that kept investors interest in the US Dollar at high levels, and demand for the currency was growing. However, October 2019 was the month when it became finally clear that the US and China are indeed willing to put an end to the trade disputes. In confirmation, the Phase One deal to be signed later on was announced. Consequently, investors felt safer and stopped fleeing accumulating reserve assets, and the US Dollar in particular.
That’s why since then the two-years uptrend is very close to a reversal. The current level of 97.35 is a local high. It was reached when the index bounced back up after dropping to 96.10 – the summer-2019 low. Also, a “death cross” was formed by the 50-day Moving Average crossing the 200-day upside-down – that’s about the resistance level of 97.50, which is tested by the index currently. If the index breaks it on the way up, it will be likely to touch the secondary resistance of the 100-day Moving Average at the level of 97.70. Otherwise, if the trajectory makes another dive down as it seems likely to, the support of 96.80 will be the first threshold to check the downward movement. If it is passed, the index will aim at the support of 96.10, questioning the entire long-term uptrend.
The daily chart of EUR/USD confirms the tendency and time zones we have noted with the US Dollar index. Since the first part of 2018, the Euro has been consistently depreciating against the USD. But that changed in Autumn 2019 for the reasons explained above. Currently, the price is at 1.1090 – that is a bounce back after it reached 1.1220, a summer high. At the same time, that is about the area where the larger downtrend collides with the local upswing. If the uptrend climbs to the resistance of 1.1220 again and goes further, we will see a new long-term trend forming.
The short-term seems to offer a relatively high probability of the US Dollar index climbing to the local resistance. But in the mid-term, if the peaceful economic environment doesn't change, there is high likelihood that it will go further down in course of depreciation of the American currency. Watch the levels, stay updated, and trade smart!
The previous year 2022, was undoubtedly tumultuous for the stock markets, with several stocks plummeting across multiple industries. Analysts have blamed the hard times on inflation, hawkish federal reserve policies, an impending global recession, and the ongoing crisis in Ukraine. This year, however, we're beginning to see some recovery in the stock markets. This article will find a few stocks worth buying this year.
In a call scheduled for January 25, 00:30 am GMT+2, Microsoft will publish the company's earnings for the final quarter of 2022 and comment on the results, projections, and outlook for the nearest future of the company.
Let's dive into the latest developments shaping the global economic landscape. Good news first: the threat of an unprecedented US debt crisis has receded, as US lawmakers passed a bill to raise the debt ceiling and avoid a catastrophic default. Phew! But don't pop the champagne just yet, because storm clouds are still looming. High inflation, rising interest rates, and sluggish growth are challenges that have yet to disappear.
Thanks to the incredible advancements in horizontal drilling and fracking technology, the United States has experienced a mind-blowing shale revolution. They've become the heavyweight champion of crude oil production, leaving Saudi Arabia and Russia in the dust. They even turned the tables and became net exporters of refined petroleum products in 2011.
Let's dive into the world of gold. Currently, the price of gold, represented by XAUUSD, is stuck in indecision, hovering around the $1,975 mark. The market is anxiously awaiting two important factors: the release of the Federal Reserve's meeting minutes and the extension of the US debt ceiling.