USD gains in the FX market
The greenback continued to gain ground in the FX market against its counterparts, as market worries over possible inflationary pressures from elevated oil prices provided support for the USD. With Oil bulls continue to lead dominating market sentiment, the prospect of persistently high energy costs could add more pressure on the Fed to keep rates unchanged for longer in an effort to lower CPI rates toward the bank’s 2% target.
Also we note that the ISM manufacturing PMI figure dropped less than expected, signaling that economic activity in the US manufacturing sector may be better than expected. In the Euro Zone, we note today the release of Euro Zone’s preliminary HICP rates and should the rates remain unchanged at 1.7% yy we may see the common currency slipping as the rate remains below the ECB’s 2% inflation target level. In the UK, finance minister Rachel Reeves is to deliver her Spring Statement to the House of Commons along with a number of macroeconomic and fiscal projections in an effort to create trust for the UK macroeconomic outlook.
We are somewhat pessimistic and should the markets remain skeptical we may see the pound losing further ground against the allready strengthening USD.
Xlence Research Team opinion
We currently view the USD as being quite dominant in the FX market and expect the greenback to continue strengthening as long as the market’s worries for the Fed’s intentions and US inflationary pressures tend to remain if not being enhanced.
Equity markets’ nerve jitters remain
US equities, despite recovering some ground, remain in a wider uncertainty which tends to weigh. US President Trump’s statements for the US-Israeli war in Iran to be continued possibly over the next 4-5 weeks, tended to enhance uncertainty in the markets for the conflict’s possible effects on the US and global economy. Please note that worries for inflationary pressures, the Fed’s intentions as described above and oil prices remaining at relatively high levels tend to fewer business opportunities and lower profitability for US companies.
Xlence Research Team opinion
Should we see equity markets’ worries intensifying as described above we may see US stock markets losing further ground, on the flip side should a more optimistic approach emerge, we may see US stockmarkets rising.
Oil prices continue to surge
Oil prices despite a correction lower restarted to rise in today’s Asian and European sessions, as market worries for the war in Iran intensified. Especially the possibility of the conflict being prolonged in turn tends to increase the possibility of further escalation and the total closure of the Straits of Hormuz. We view both sides as still pursuing maximalist goals which intensifies uncertainty for the supply side of the international oil market. Also market worries for the Iranians planting mines in the Straits, interrupting fully the transport of oil tend to intensify and if such a scenario is materialised we may see oil prices rallying through the $100 per barrel roof.
Xlence Research Team opinion
We expect oil prices to rise further before correcting lower and on a fundamental level we continue to view the oil prices as supported. Yet should market worries start to ease, we may see oil prices retreating.
Is Bitcoin bottoming out?
Bitcoin’s price edged higher yesterday, yet overall seems to maintain a sideways motion for the time being. It should be noted that the fundamental uncertainty regarding the war in Iran along with all the side-effects mentioned above, tend to weigh on the cryptocurrency’s price, yet on the flip side the reports for ETF inflows tend to provide optimism in crypto market with crypto traders arguing whether the market is bottoming out or is in the midst of a bear trap.
Xlence Research Team opinion
For the time being we expect Bitcoin’s price to remain in a sideways motion and on a technical level, the narrowing of the Bollinger bands along with the RSI indicator nearing the reading of 50, tends to support our hypothesis yet the cryptocurrency’s price could break out to any direction at any given time.
Disclaimer: This information is not considered investment advice or an investment recommendation, but instead a marketing communication.
