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The dollar is on the back foot as risk rebounds following last week's jittery mood amid the bond market rout. The selloff has somewhat abated and now that we have moved on from month-end trading, the market will be hoping for more clarity this week.

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The US House passing Biden's $1.9 trillion stimulus bill is also a positive factor but the challenge remains getting it through Congress over the next 14 days.

That will be a key issue to pay attention to in the days/weeks ahead.

The surge in yields last week is bringing about many questions in the market right now, especially that of central bank credibility down the line.

The tantrum without the taper. Is this just the beginning or is this the market testing central banks' resolve until they are willing to respond?

Either way, this might yet be a significant shift in the timeline of the market outlook this year and it could accelerate further if the vaccine rollout globally gathers pace.

Going back to FX, the pound is finding some steadier footing with EUR/GBP falling back to test key near-term levels with the lows today limited by the 100-hour MA so far.

Meanwhile, the aussie is gaining some modest ground ahead of the RBA tomorrow - which might see the central bank try and jawbone the currency as it steps up QE recently to try and quell the surge higher in yields.

AUD/JPY still trades just under key near-term levels below 83.00 with AUD/USD gains capped by the 23.6 retracement level of the swing move lower last week @ 0.7767.

Elsewhere, commodities are observing a modest rebound with gold and silver both 1% higher but the former is still trading below its November low.

Oil is also up by $1 to $62.50 with the monthly close last week falling just short of breaching its 100-day MA and the key resistance trendline bands.


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