End of week analysis: Risk-off eases as the dollar plummets sharply

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End of week analysis: Risk-off eases as the dollar plummets sharply

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The week-long risk-off sentiment is easing on Friday as high-beta instruments cut down some of the week’s losses. The dollar is back on the backfoot as the index broke below 92.5.

Equities rally today. S&P 500 is up 21 points after coming very close to retesting 4486. While there are indications that the stock index might take one more leg to 4480 before resuming the bullish trend, the high-beta FX might not go that deep. Overnight and into the London session, high-beta NZD, AUD and CAD are leading the gainers on the major FX table while the safe-haven Yen is the biggest laggard followed by CHF and the USD switching position. Meanwhile, the Euro fell further after Thursday’s dovish ECB but the Sterling was the biggest winner on Thursday with a fast breakout to the upside.

The US bond yield has spent most of the week downbeat but the sharp rebound could complete a total recovery as a bullish breakout surface. On the other hand, the Gold price retraced to 1800 before the London session. If the treasury yield maintains the current resurgence, the recent Gold bearish run should continue down to 1750.

The oil market recovered sharply a week of gradual decline to $67.5. WTI’s bullish neckline remains at $70. A break above should see the bulls push high into the higher 70s. However, $67 remains the ideal bottom for this bearish correction if the bears resist the breakout and instead drag the price toward $68.

Looking ahead today

Canada Employment Reports

With risk appetite higher than we have seen at any time this week and a higher oil price, the Canadian dollar has resumed strength across the board especially against risk-off currencies. CADJPY and CADCHF have recovered about 50% of the November decline while USDCAD is close to breaking below the 1.26 psychological support.

For the CAD employment change, the market consensus expects 67.2k which is very much below the 94k in the previous month. However, the unemployment rate is expected at 7.3% – better than the previous 7.5%.  Traders should watch for the deviation between the actual and expected figures. better than estimates figures for the two labor metrics should add to the current CAD resurgence. However, a disappointing one could lead to a significant setback.

US PPI – Expected figure at 0.6% against previous 1%.

Friday, September 10 market forecast

Disclaimer: This communication is for informational purposes only and should not be viewed as any form of recommendation as to a particular course of action or as investment advice. It is not intended as an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction. This communication has been prepared based upon information, including market prices, data, and other information, believed to be reliable; however, TigerWit does not warrant its completeness or accuracy. Trading CFDs involve risk and can result in loss of capital.

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