Markets so positive even Boeing went up!

Powell’s testimony didn’t really change but market sentiment suddenly switch which we can only put down to the Johnson & Johnson single does vaccine.  The DFA approval pushed all indices higher.  We expect to see some profit taking but for the moves higher to continue. 

The J&J vaccine news gives investors a higher certainty that the US economy will be reopening sooner than expected and that consumer spending will boost businesses helped by trillions of dollars of stimulus.

We will keep watching long-dated bond yields which at one point yesterday hit a high of 1.435%, a sign that inflation and economic demand are strengthening, and that stocks may be overvalued.

Pound Sterling posted an expected correction on profit-booking after hitting our 2021 target at 1.4225 but overall remains strong.

Positive news on the vaccine front along with US10Y above 1.40% should keep gold under pressure, with an hourly close below 1790 support level to favour further downside.

The eurozone consumer confidence figures are out at 1000 GMT as well as US GDP readings and the latest jobless claims numbers due at 1300 GMT.

Our overview and outlook of the key trading pairs and indices is as follows

EURUSD – The US dollar sold off yesterday after Fed Powell pushed back on inflation once again, boosting the euro higher towards the 1.2180 resistance. Once this resistance level is taken out, we could see an accelerated jump above 1.22. However, further upside could remain capped amid surging US Treasury yields.

GBPUSD – The cable bulls bought the dips yesterday as expected amid the broad-based US dollar weakness, after Jerome Powell gave the green light on the risky assets. The short-term rising trend line should keep the momentum going, but the Pound bulls need to break above the recent high, 1.4238, to extend further gains towards 1.43.

USDJPY – The USD/JPY rallied to the ¥106.10 resistance level on strong upside momentum fuelled by rising long-dated US bond yields, which at one point yesterday hit a high of 1.435%. If yields continue to rise in the days ahead, this will almost certainly trigger a break of the ¥106.10 resistance and turn things around from a long-term perspective boosting this currency pair above the ¥107 mark.

FTSE 100 – The FTSE100 surged higher from support levels around 6570 to key pivotal resistance level at 6700 lifted by FDA approval of Johnson & Johnson's single-dose Covid-19 vaccine. This morning, momentum seems to be weakening after Standard Chartered reported a sharp drop in profits for 2020. But overall London stocks are expected to remain strong following Asian markets higher and Wall Street ending in record territory yesterday, with 6670 as closest support level and a breach of the 6700-resistance level to trigger a resumption of the strong bullish momentum ahead of a busy corporate calendar in the UK today, with annual results from miner Anglo American, luxury carmaker Aston Martin, defence giant BAE Systems, packaging firm Mondi, and drug maker Hikma.

DOW JONES – The Dow Jones Industrial Average ripped 450 points to a record 32000 yesterday after the FDA said Johnson & Johnson’s Covid-19 vaccine looks ready for emergency-use authorization. This gives investors a higher certainty that the economy in the US will be reopening soon and that consumer spending will boost businesses helped by trillions of dollars of stimulus. Looking ahead, we will keep watching long-dated bond yields which at one point yesterday hit a high of 1.435%, a sign that inflation and economic demand are strengthening, and that stocks may be overvalued. Dow chart technical indicators favour a slight profit-booking correction with 31900 as closest support and target ahead of US GDP readings and the latest jobless claims numbers due later today.

DAX 30 – Strong bullish momentum in global stock markets including German stocks resume, fuelled by cheap cash and reflation hopes, with the DAX30 once again surging above the 200-period moving average and above the 14000 mark, overlooking the risks of rising long-dated bond yields. Today, equities are expecting to continue to power higher with a break of the 14100 level to trigger accelerated buying towards the 14200 key important resistance level ahead of eurozone consumer confidence figures at 1000 GMT.

GOLD – Choppy and volatile session for the yellow metal, dropping towards $1784 level pre-Powell testimony, to regain some ground and then resume printing below the 200 period SMA on the hourly chart as Fed Powell pushed back on inflation concerns once again, reiterating that the economy has a long way to recovery. Positive news on the vaccine front along with US10Y above 1.40% should keep the yellow metal under pressure, with an hourly close below 1790 support level to favour further downside.

USOIL – WTI Crude printed an hourly close above $61.55 resistance level, climbing to more than one-year highs despite EIA data registering a build-up in weekly inventories as investors focused instead on data showing that US crude output fell below 10 Mbpd after the cold snap. Barclays joined Goldman Sachs in revising their oil forecast upwards by $6-$7 a barrel, adding to bullish momentum, with an hourly close above $63.50 in today’s session to open the door to higher prints.