Investors are questioning the stability of EU, should you?

22 February, 2017

The US radiant future under the Trumpnomics remains a hot topic for speculation, propelling the greenbacks demand. More and more investors are trying to hop on the Dollars gravy train, as caution is lowered. At the same time, experts are quiet, because no one wants to think of the majority going the wrong direction.

Nevertheless, after a holiday in the US, the Dollar moved higher in the Asian session, with unfading optimism and persistence being instrumental. Growth prospects remain vague as the lack of a clear trend makes the greenback rally look like an inertial move. The Euro left the bastion for an upturn at 1.06 while the House of Lords in Britain is trying to figure out the balance between national interests and ties with the EU, pulling the Pound down again. Closing below the 1.2450 level, the GBP/USD dropped some hints for a downward breakout below 1.2400.

The Yield of US treasuries renewed upswing, raising the bar of inflation expectations even higher. FED talks have been side-lined as March meeting is too far to spur speculations, while investors focus turned to turmoil in the Oval Office breaking the common course of the political establishment in the country. Despite the ruckus, a showdown is not likely to trickle down into the broader economy.

The European indices advanced on the lack of ECB cues for tapering off the support, namely reducing the size of the asset-purchase program. Investors are not deterred by the comeback of the bond market demand, trying to question the stability of EU ahead of elections in France. DAX is fearlessly climbing to the peaks of May 2015, bracing for the breakout of 12,000 marks after failed test in January. ECB actions and economic data of the Germany manufacturing and growing surplus is consistently proving investors with a straight path. We believe that the backing rally from the current levels may be a “touch-and-go” move as with every tick higher the desire to jump into a reverse trade will grow.

The side movement on Gold is also a good indicator for the vigilance of investors. The bullion has been ranging from $1,220-1,240 throughout three weeks while other safe heaven metals are pretty inconsistent in dynamics. The Oil prices are out of sync as WTI gained 0.50% while Brent stalls near a close, ahead of the news from OPEC cartel and API crude reserves report.

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