US stocks are rising again as the reflation trade continues with the yield curve continuing to steepen. There is no main driver for the markets today. Treasury yields are not going anywhere, earnings from Merck, Unilever, and Yum are nothing to get excited over, and the retail-driven trading frenzy continues to ease.
Dogecoin
Elon Musk’s Twitter break is over and clearly his love for Dogecoin is not abating. Musk delivered a wrath of tweets on SpaceX and endorsements for Dogecoin. Musk took down his Bitcoin bio and tweeted, “Dogecoin is the people’s crypto” and “No highs, no lows, only Doge”.
Dogecoin surged higher and sparked a broad rally across all the major cryptocurrencies. Bitcoin initially tumbled after Musk removed Bitcoin from his bio, but still seems poised for another run towards the $40,000 level.
Apple Car
Apple appears ready to take another stab at making a car. A partnership between the tech giant and Hyundai-Kia is nearing, but that doesn’t mean another auto maker can’t join the mix. An Apple-branded autonomous electric vehicle with Hyundai-Kia could go into production in 2024.
Apple’s automotive efforts started in 2014 and were abandoned in 2016. Taking on Tesla will be a difficult task and in order to be successful Apple will need to have a better battery design.
FX
Since the Georgia Senate runoff races that gave President Biden his ‘blue wave’ in January the dollar has been on a tear against the euro. At the end of last year, net dollar selling was approaching its highest levels in a decade, so an unwind of this trade was needed. After nearly touching 1.2350 in January, the euro has fallen to below the 1.20 level. The macroeconomic outlook for the eurozone took a hit on a disappointing vaccine rollout and that downbeat assessment could still trigger some further pain for the euro.
Eventually the dollar will lose its crown and the unprecedented fiscal and monetary efforts will weigh on the currency. The EUR/USD currency pair could easily test 1.19 this week, but the bearish slide should exhaust itself on a move towards the 1.17 region.
BOE
The British pound surged after the BOE eased concerns that they were closer to considering negative interest rates. Hope for the best and prepare for the worst is what the BOE is telling the banks. Preparing for negative rates was an effective next step. The Bank is considering a potential tiered system. The GDP growth forecast was lowered from 7.5% to 5.0%.
The UK economy is turning a corner and their vaccine rollout success should point to a brighter second half of the year.
Oil
Crude continues to rise on strong momentum from falling stockpiles and COVID vaccine progress. It’s been quiet on the energy front so far, which is allowing energy traders to focus on the improving supply and demand fundamentals.
Brent crude has a price barrier at the $60 level, so slowly put a pause in the current rally.
Gold
Gold is dropping as the dollar rebound continues and demand for safe-havens ebb. Gold is consolidating but if it breaks below $1,800, it could find itself in the danger zone. The unwinding of bearish dollar bets is almost over, but it could still have one last push.
The longer-term outlook is still bullish for gold. A quick passing of President Biden's $1.9 trillion stimulus relief plan should provide some underlying support for gold.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors — not necessarily OANDA’s, its officers or directors. OANDA’s Terms of Use and Privacy Policy apply. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Recommended Content
Editors’ Picks
EUR/USD under pressure below 1.0550 on persistent USD strength
EUR/USD trades deep in the red below 1.0550 on Wednesday. The US Dollar benefits from rising US Treasury bond yields and the cautious market mood, forcing the pair to stay on the back foot. Several Federal Reserve policymakers will be delivering speeches later in the day.
GBP/USD declines toward 1.2650, erases post-CPI gains
GBP/USD loses its traction and retreats toward 1.2650 on Wednesday. Although the stronger-than-expected inflation data from the UK helped Pound Sterling gather strength earlier in the day, the risk-averse market atmosphere caused the pair to reverse its direction.
Gold recovers toward $2,650 as mood sours
Following a pullback during the European trading hours, Gold regains its traction and climbs toward $2,650. Escalating geopolitical tensions help XAU/USD stretch higher, while rising US Treasury bond yields limit the pair's upside.
Why is Bitcoin performing better than Ethereum? ETH lags as BTC smashes new all-time high records
Bitcoin has outperformed Ethereum in the past two years, setting new highs while the top altcoin struggles to catch up with speed. Several experts exclusively revealed to FXStreet that Ethereum needs global recognition, a stronger narrative and increased on-chain activity for the tide to shift in its favor.
Sticky UK services inflation to keep BoE cutting gradually
Services inflation is set to bounce around 5% into the winter, while headline CPI could get close to 3% in January. That reduces the chance of a rate cut in December, but in the spring, we think there is still a good chance the Bank of England will accelerate its easing cycle.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.