Trade ideas thread - European session 7 May 2021
Daily thread to exchange ideas and to share your thoughtsThe dollar is keeping steadier after a slight retreat yesterday as the greenback continues to keep in a state of flux this week with little help from Treasury yields in general.
10-year yields are little changed, holding around 1.566% as the Fed helped to temper inflation fears in the bond market. But today's non-farm payrolls report may be one to watch in case wages also help to rebuff the inflation narrative.
As for equities, the Goldilocks theme continues to dominate proceedings with the Dow benefiting from the best of both worlds i.e. reflation focus helps to see rotation play out of tech in the event higher yields start to become a worry.
Elsewhere in FX, the pound was among the laggards yesterday despite the BOE deciding to slow down QE purchases. That said, I would still argue the quid remains a buy on any major dips given the current fundamental backdrop.
The loonie keeps firmer as well with USD/CAD breaking to fresh lows since September 2017 and eyeing the 1.2100 handle next. CAD/JPY is another pair I've been captivated with as it breaks to fresh highs since January 2018 and eyes 90.00 now.
Amid higher commodity prices and the BOC tightening policy, there's little to not like with the loonie besides being stretched from a technical perspective.
Meanwhile, gold also saw a strong breakout above $1,800 and its 100-day moving average as buyers try to attempt for an upside push. While investor appetite is still subdued, it is hard to fight the technicals for this one - at least for now.
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