FXTM information and reviews
IronFX information and reviews
Libertex information and reviews
FXCC information and reviews
Markets.com information and reviews
FxPro information and reviews
43 916.48

Dollar have Powell on its side

24 February 2021

The pressure on stock markets eased somewhat by the end of the day on Tuesday. The decline in Tesla shares was reduced from 13% to just 2% by the end of the day, and Apple almost clawed back all of the 6% fall to just 0.1%. The S&P500 and Dow Jones indices were both positive on the day, thanks to stronger buying towards the end of the session.

However, we do not share the optimism of many commentators, who argue that continued policy easing promises have reassured investors. The US 10-year yields have declined from 1.39% on Monday to 1.33% in debt markets now, just a shy drop after growth from 0.9% year to date.

It is worth paying attention to the dynamics of the debt market in the coming days. Further declines in yields can return buyers to growth stocks and boost demand for other risky assets. Still, we assume that the debt market rally will resume soon. In our view, the markets were hoping to hear hints from Powell about the possibility of expanding QE, which could stop the rise of bond yields.

Yields are rising (the price is falling) due to the increased issuance of debt securities to finance the budget deficit. Another upside factor is estimates that the USA, facing more losses from coronavirus than any other country in the world, will take longer to get into shape. In the long term, this will require more monetary easing and undercut the value of the dollar.

That is, Treasuries are partly sold off due to the large current and expected supply. Promises to keep an unchanged policy could push up US government bond yields in the coming months, causing pressure on risk assets, including growth stocks.

Suppose there are soon hints from Powell of more buying of assets. In that case, it could return a strong momentum to markets and risk assets, similar to what we saw last year. In the meantime, Powell’s assurances are relatively good news for the US currency. The Dollar Index has been unchanged over the past 24 hours and remains near 90, the low area since mid-January. However, beneath this lull is a strengthening of USD against the defensive JPY and CHF, stability against the EUR and a decline against GBP, AUD, NZD, where the economy is recovering faster.



US Markets lost major support, Asian Indices are melting
US Markets lost major support, Asian Indices are melting

Global markets closed last week on the back foot, and no significant positive factors emerged in Asian trading, increasing the flight to safety. The Hang Seng lost...

20 Sep 2021

US Retail sales and other data has supported Dollar
US Retail sales and other data has supported Dollar

The US Retail sales notably exceeded expectations, adding 0.7% in August vs an expected 0.7% decline. The increase to August last year is an impressive 14.9%...

17 Sep 2021

Geopolitics Fire Up Up and Cryptos Are Booming
Geopolitics Fire Up Up and Cryptos Are Booming

Futures in the United States and Europe are trading lower today as investors are worried about the new security agreement between the U.S., the U.K. and Australia...

16 Sep 2021

UK inflation surges, stocks struggle
UK inflation surges, stocks struggle

European markets flat at the open this morning as UK inflation surged to a record high in August and Chinese economic data was soft. China’s retail sales fell to...

15 Sep 2021

Gold is anxiously waiting for the US inflation data
Gold is anxiously waiting for the US inflation data

Gold, hovering around $1790 since last Thursday, might take an even harder hit. The bears are waiting for a good signal to launch an attack. It is now holding it below significant levels...

14 Sep 2021

Here Is Why Stock Futures Are Trading Lower
Here Is Why Stock Futures Are Trading Lower

Despite a week of doom and gloom in the stock markets, futures in the United States are still trading lower. Since February, the S&P 500 has been on its longest...

13 Sep 2021

Editors' Picks

OctaFX information and reviews
HotForex information and reviews
XM information and reviews
FXCM information and reviews
Vantage FX information and reviews
Vantage FX
Moneta Markets information and reviews
Moneta Markets

© 2006-2021 Forex-Ratings.com

The usage of this website constitutes acceptance of the following legal information.
Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website (reviews, brokers' news, comments, analysis, quotes, forecasts or other information materials provided by Forex Ratings, as well as information provided by the partners), including graphical information about the forex companies, brokers and dealing desks, is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Forex Ratings shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about the forex companies. The entire responsibility for the contents rests with the commentators. Reprint of the materials is available only with the permission of the editorial staff.
We use cookies to improve your experience and to make your stay with us more comfortable. By using Forex-Ratings.com website you agree to the cookies policy.