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Active buyers of shares and sellers of the dollar returned to the stock markets



US markets finished trading on Thursday confidently, creating a positive impetus for the start of trading on Friday. If the Nonfarm Payrolls report on the labor market published today does not cause monstrous disappointment, it will be possible to talk about the end of the period of sluggishness in the markets and the attempts of the American currency to start a correction. Having touched historic highs on April 29, the Nasdaq100 index came under pressure, subsequently losing about 5%. This indicates that the tendency to strengthen purchases during downturns continues. It is also striking that the purchases, upon reaching a 5% correction, appeared at the close of the session on Tuesday and Thursday, indicating the confidence of institutional players in the fundamental reasons for buying stocks. DowJones30 avoided any significant drawdown at all, closing in positive territory every trading day in May and ending Thursday with a 0.9% gain. At the same time, the foreign exchange market gave signals even earlier that we see a short-term reshuffle of portfolios, and not a full-fledged avoidance of risks. At the very beginning of May, the strengthening of the dollar stalled on the way to the technical correction levels by 61.8% Fibonacci from the amplitude of the April movement. The bears have methodically reversed the USDCAD pair downward for five weeks. The Canadian dollar was the first among the major currencies to return to fresh highs against the US dollar in recent years. Now this pair should be viewed as a manifestation of the interest of American investors, and the dollar bears are clearly winning there. USDCNH, a sentiment indicator for China, also completed its mini-correction. New local lows of the exchange rate confirm the prevalence of demand for risky assets. It is still very weakly manifested in Chinese stocks, but does not spoil the trend towards risk-taking. Global demand for stocks and high yielding currencies versus low yielding currencies is supported by optimistic labor market expectations and signs of a sustained recovery in commodity demand despite multi-year highs in prices. These are promising conditions for the stock market until the largest regulators, the Fed, the ECB, the Bank of Japan and the Bank of England, moved to the stage of tightening policies. In the foreign exchange market, until then, the dollar risks being the main laggard, retreating to a wide range of currencies from CAD, AUD and NZD to EUR, GBP and CNY. ____________ Alexander Kuptsikevich, Lead Analyst, FxPro

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