Nasdaq and the price of gold are tracking higher with the US treasury bonds. As the yields go down, the bond prices go up and the prices of gold and technology stocks follow the lead. Since breaking out the bullish wedge we identified in Monday’s report the price of gold has rallied over 1.6% before giving some back this morning. It has been our view for some time that the yields are not likely to rise anymore. And when the yields don’t go up they go down which has helped our long-biased view on gold and technology stocks. By reading further you agree with our disclaimer at the bottom of this page and acknowledge that we do not provide investment advice.

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Nasdaq finished 1.03% higher yesterday while S&P 500 and DJIA gained 0.42% and 0.17% respectively. Sectors gaining relative to the S&P500 this week are discretionary, communication services and technology. 

Powell noted that the number of Covid-19 cases is rising and could slow the recovery down. He urged people to get vaccinated while he, once again, emphasized that the Fed is not going diminish its support to the economy any time soon. In his view, the rise in prices this year is likely to be temporary. 

US unemployment claims came in at 744K or +2.19% higher than the week before (revised to 728K). The analyst consensus expectation was that the number of claims would be significantly lower (694K). The main risk event today is the release of the Canadian employment numbers at 12:30 pm GMT (1:30 pm BST). For more details on macroeconomic releases see our economic calendar

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GBPUSD has been weak after creating a lower swing high at 1.3918. The pair is now in a downtrend and therefore likely to violate the 1.3670 support level. Just below this level (at 1.3643) we have the 38.2% retracement level and the next confluence area after this can be found at 1.3562 – 1.3584 (channel low and historical support). The nearest confluence area above the market price is at 1.3808 – 1.3868 but this level isn’t likely to be reached unless break decisively above 1.3425 resistance. 

EURGBP has broken out of a medium-term downtrend and rallied above 23.6% Fibonacci retracement. The pair is now overbought as per stochastic oscillator (5.3.3) and could indeed sooner or later retrace some of the recent rally. This retracement would be likely to create a higher swing low. Wedge width points to the 38.2% retracement level. After the breakout from such a sizeable wedge and a medium-term downtrend, it looks likely that the pair will reach this level in the not too distant future.

Update: NZDCHF is breaking below a key support level at 0.6508. The pair has dropped over 2% in one week and the downside momentum is now continuing. Unless the pair rallies and closes decisively above 0.6528 it is likely to the next technical confluence area at 0.6450 – 0.6465 (38.2% retracement level and channel low).

Update: EURNZD created a higher low in the 4h resolution and is now trading inside the confluence area we highlighted yesterday. It looks likely the 1.6990 resistance is challenged sooner or later. A decisive break above this level would indicate the 1.7050 – 1.7100 confluence area could come into play. A lower high and a break below 1.6867 would be bearish.

Recent macroeconomic data releases

  • US Average Hourly Earnings -0.1%, 0.1% expected
  • US Non-Farm Employment Change 916K, 652K expected
  • US Unemployment Rate 6.0%, 6.0% expected
  • US ISM Services PMI 63.7, 58.3 expected
  • RBA Cash Rate 0.10%, 0.10% expected
  • Canadian Ivey PMI 72.9 62 expected
  • US Crude Oil Inventories -3.5M, -2.0M expected
  • US Unemployment Claims 744K, 682K expected

Important macroeconomic data releases today

  • RBA Financial Stability Review
  • Canadian Employment Change 101.5K expected
  • Canadian Unemployment Rate 8.0% expected

You may access the times and dates in the economic calendar here.

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Janne Muta
Chief Market Analyst
TIOmarkets.com

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