The US dollar continued to decline against other major currencies, with the USDX index, which measures the strength of the greenback against a basket of other currencies trading by Wednesday night barely above the low from 13 days ago.
After some of the most traded equity indices in the world like the NASDAQ or the German DAX reached a new all-time high over the course of the trading session on Tuesday, at the end of the day both settled lower. However, by Wednesday morning the bullish sentiment was back with indices again trading in the green.
Sentiment in cryptocurrencies turned again positive, with Bitcoin rallying towards a new all-time high, racing above the $28k mark, while Ethereum consolidated above $700. While these two key cryptocurrencies are now clearly in the green over the past 24 hours and the past week, for Ripple the sentiment remains highly bearish, with the token losing more than half its value within just one week. The recent charges brought up by the SEC also prompted multiple well-known crypto exchanges to halt or at least partially restrict the trading of Ripple on their venues.
On Wednesday most key data releases will again come from the US, where data on home sales, investor confidence and oil inventories can be expected.
Gold
The more popular precious metals including gold silver and even palladium traded mostly sideways on Tuesday, while platinum prices continued to push higher, reaching a new three weeks high.
Despite the weakened dollar and the agreement for more stimulus measures by lawmakers in the US, gold prices remained almost unchanged compared to last week. While an argument could be made that these developments should spur higher gold prices, it should be noted that over the past 12 months gold prices are already up by 21 per cent. At the same time the USDX, which is one indicator of the dollar-strength is down by around 7 percent. If one would use a house price index as inflation measure like the FHFA State House Price Index, for Q3 of 2020 even for much sought after states like Texas (+6.73), New York (+7.05) or Florida (+8.43) the price move would not fully fill up the gap.
Still, given the continued need for stimulus to stay afloat during the pandemic, it remains to be seen what impact government measures will have on inflation and whether gold might indeed be a suitable hedge over the longer terms against such policies for investors.
WTI Oil
Oil prices moved higher during the trading session on Tuesday, and with this move oil prices might close the week still in the green. Besides the negative price move over the past week, WTI crude oil prices closed in the green for seven weeks in a row.
The positive sentiment might have been supported by the weekly data from the American Petroleum Institute (API), which showed that over the past reporting weeks crude oil stockpiles were down by 4.79 million barrels.
On Wednesday then the Energy Information Administration (EIA) publishes its weekly statistics, which will include data on crude oil, gasoline and distillate stockpile changes.
US 500
Major indices including the US 500 and US Tech 100 attained new all-time records on Tuesday but had to settle then lower as valuations moved South in the afternoon hours. Still, over the course of Wednesday night a recovery could be observed and by the start of the European trading session on Wednesday, the US Tech 100 was not far from its recent record.
Especially bank (US Banks ETF -1.50%) stocks were under pressure, while some moderate gains were seen in the health care sector (US Health Care ETF +0.45%).
Stocks of the Chinese e-commerce company Alibaba (+6.37%) made a strong comeback after the recent tumble following antitrust investigations by the Chinese regulators. Some analysts see other smaller e-commerce platforms like Pinduoduo (+15.54%) as having potential to benefit from these developments.
On Wednesday the State Street Investor Confidence Index and the Chicago PMI Business Barometer can be expected.
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