USD inflation everywhere.
Whether we look at the major dollar rivals, or commodities or stocks almost everything is in an uptrend. Some commodity futures (lumber and copper) have already for some time indicated that people don’t want to hold on to their dollars. Not so long ago the CPI numbers have started to rally – so to speak, and people like Warren Buffett with their watchful eye close to the operation of their businesses are pointing to significant inflation that forces the businesses to hike prices. Last week the fall out in employment statistics intensified the USD sell-off and helped several markets from AUD and NZD to cable and gold rally higher. This week we might see some returns to means but many markets are still trending against the USD. 

Major USD Rivals
The strongest movers against the USD since the beginning of the last week were AUD (+1.71%), NZD (+1.57%), GBP (+1.51%) and CAD (+1.39%). The worst performer among the major dollar rivals was JPY(0.40%). Most of the moves came on Friday as the US payrolls data came in much weaker than expected. These markets are obviously still in uptrends but have traded into resistance levels today. GBPUSD rallied to a resistance created by a rising trendline and AUDUSD hit a resistance level at 1.4000. NZDUSD is trading near to a minor swing point (at 0.7307) which has slowed the bulls down a bit. USDCAD has moved to and even beyond our target and remains weak. The move to the downside is getting quite extended though and could therefore attract short-covering this week.  By reading further you agree with our disclaimer at the end of this report and acknowledge that we do not provide investment advice.

The best performer in the most traded commodities last week was silver, up 7.0%, while gold rallied 3.70% and USOIL 2.7%. The prices of gold and silver continue to rally while is trading a little more cautiously but is still in an uptrend. The next significant resistances in gold are around 1855 and 1875. Silver bulls are likely to face some challenges at 28.30, or about 2% higher from the current market price. USOIL created a higher reactionary high at 63.87 in Friday’s trading and has since had a gap opening higher. The next resistance levels in this up-trending market are 66.88 and 67.83.

US Equities
DJIA and S&P 500 have gained 2.6% and 1.0% respectively since the beginning of last week while Russell 2000 (+0.14%) and Nasdaq (-1.17%) have done less well. The stabilization in yields has impacted these growth-oriented and thus finance-dependant sectors negatively. The sectors that gained the most relative to the S&P 500 index were energy (4.72%), materials (3.31%) and financials (2.72%). Utilities (-1.96%) and real estate (-1.35%) saw the biggest outflows signalling that the US stock markets stay in bullish mode. Among the stocks traded by TIOmarkets traders, we saw sizeable gains in EOG (+10.7%), BKR (+19.9%), GLEN (+9.0%). 

Macro Drivers for the USD
As the most followed, invested and traded markets for risky assets are priced in the USD it is helpful to understand what macroeconomic factors impact the other side of the equation, the USD. Whether we are trading EURUSD, XAUUSD or US equity CFDs the factors impacting the dollar, the nominator in the equation, have a significant role in the formation of all medium to long-term price action. The following table summarises the most important fundamentals.

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 Market News & Facts

  • State of emergency in the US due to a pipeline cyber attack 
  • Australian business confidence 26 vs. 17 previous
  • Historic NFP disappointment: 266K instead of 990K
  • S&P Dow Jones launched three new cryptocurrency indices
  • Merkel opposes IP waivers on COVID-19 vaccines
  • China suspends strategic economic dialogue with Australia
  • Biden supports waiving IP rights on COVID-19 vaccines
  • Fed’s Rosengren: Too early to discuss QE tapering
  • ADP: biggest gain in seven months 
  • RBA keeps rates unchanged at 0.10%
  • Digital Dollar Project to generate data to help US policymakers to develop a digital dollar.
  • Australian first-quarter export prices up by 11.2%
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The Next Main Risk Events

  • AUD – Annual Budget Release
  • GBP – BOE Gov Bailey’s Speech
  • GBP – Prelim GDP
  • EUR – EU Economic Forecast
  • GBP – BOE Gov Bailey’s Speech
  • USD – CPI 
  • USD – Core CPI
  • USD – Crude Oil Inventories
  • USD – 10-y Bond Auction

For more information and details see the TIOmarkets economic calendar here.

Trade Safe!

Janne Muta
Chief Market Analyst

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DISCLAIMER TIOmarkets offers exclusively consultancy-free service. The views expressed in this blog are our opinions only and made available purely for educational and marketing purposes and do NOT constitute advice or investment recommendation (and should not be considered as such) and do not in any way constitute an invitation to acquire any financial instrument or product. TIOmarkets and its affiliates and consultants are not liable for any damages that may be caused by individual comments or statements by TIOmarkets analysis and assumes no liability with respect to the completeness and correctness of the content presented. The investor is solely responsible for the risk of his/her investment decisions. The analyzes and comments presented do not include any consideration of your personal investment objectives, financial circumstances or needs. The content has not been prepared in accordance with any legal requirements for financial analyzes and must, therefore, be viewed by the reader as marketing information. TIOmarkets prohibits duplication or publication without explicit approval. FX and CFDs are leveraged products. They are not suitable for every investor, as they carry a high risk of losing your capital. Please ensure you fully understand the risks involved. All the prices in this report are CFD prices based on price charts provided by TIOmarkets unless otherwise stated. 

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