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The dollar further improved its already strong position against other major currencies by Monday. Sentiment in emerging markets was again a bit mixed. The USD/INR rate continued trading almost unchanged despite the overall strengthened greenback. By contrast the USD/TRY rate reached for the first time in 2021 the 7.80-level.
Cyrptos recovered from the slump early on Monday and are now on track to trade the third day in a row with a significant upside as Bitcoin smashed through the $54k level by Tuesday morning. At the same time the total market capitalization of the cryptocurrency market ballooned above $1.7 trillion.
Equity markets traded quite divergent at the start of the week with indices like the US 30 and Germany 30 rallying to new records, while the US tech sector suffered significant daily losses. The Chinese A50 index also extended its losses trading by Tuesday morning down by more than five per cent from last week’s closing rate.
On Tuesday the Italian industrial production numbers will be released. In the US the NFIB Small Business Optimism Index and the Redbook store sales statistics will be published. Later in the Asian-Pacific trading session Chinese inflation data will be released as well as Australian data on building approvals and consumer sentiment.
Driven by the strong dollar the EUR/USD pair declined to a new three months low, trading at times below the 1.185 mark. The euro itself traded mixed against other major currencies as the common European currency gained against the Japanese yen (JPY), while losing out against the again strengthening pound sterling (GBP).
By the beginning of the European trading session the euro traded moderately higher. The German trade balance for January, which was released at that time showed a significant increase in trade surplus, increasing from €16.1 billion in the previous month to €22.2 billion.
On Tuesday the again revised GDP numbers for the EU in Q4 are expected. No significant deviation from the previously released -0.6% quarterly performance should be expected according to analysts.
Gold prices further declined at the start of the week, reaching a new 10 months low. The consistently higher yields in the bond markets are seen as one key pressure point keeping gold prices down. Silver prices were also down at the same time, while platinum continued trading moderately higher. Palladium prices are meanwhile closing onto the low from ten days ago.
As gold is mostly traded in US dollar, traders might look especially at significant US fundamentals like the CPI to be released on Wednesday or the weekly jobless claims numbers due on Thursday for signals.
After peaking during the Asian trading session on Monday night, oil prices rapidly retraced lower after the spike attributed to the news that Iran-backed Houthi rebels from Yemen successfully attacked a Saudi oil facility. However at these elevated prices there are concerns that oil might be already too high and the demand elasticity might affect a further recovery.
On Tuesday the American Petroleum Institute (API) publishes its weekly statistical bulletin, followed by weekly data from the Energy Information Administration (EIA) regarding the weekly stockpile change in crude oil, gasoline and distillate. Driven by the disruptions of the oil industry especially in Texas due to the cold spell, last week an increase in oil stockpiles by 21.6 million barrels was reported, while a somewhat higher (combined) draw in terms of gasoline and distillates was confirmed at the same time.
Stock market performance was quite mixed at the beginning of the week. The US 30 index seemed to decouple significantly from the US Tech 100 index’s performance as it rallied to a new all-time high, while tech stocks were again depressed, with the year-to-date performance down by more than three per cent.
The chip sector (US Semiconductors ETF -5.10%) posted again significant losses with the semiconductor shortage still affecting markets. Qualcomm’s (-5.00%) president warned in an interview released by cnet on Frida that the semiconductor shortage may persist throughout this year. An even bigger downside was seen in some of the biggest cap tech companies as the FANG+ (-5.22%) continued to drop at an alarming pace, losing over the past five trading days more than 12 per cent. Tesla (-5.69%) fans might be in for another disappointment as the stock value by now is trading down by more than 37 per cent from its all-time high six weeks ago. By contrast traditional car manufacturers like Ford (+3.27%) and GM (+2.06%) traded with a clear upside on Monday.
On Tuesday quarterly results from companies including Thor Industries and MongoDB can be expected. Then on Wednesday Campbell Soup and Oracle are publishing their results.
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