April 16, 2021 13:48:45

Headlines

* Stocks push ever higher with another week of gains

* USD mixed and sat on 50-day SMA

* Gold scales seven-week highs, best weekly gain since mid-December

* Bitcoin below $61,000 after Turkey announces ban on payments

US equities have opened up with more gains in the last session of the week after more confirmation that the global recovery is on track. China GDP jumped to a record 18.3% propelled by stronger demand at home and abroad. This post-Covid rebound may level off as government support wanes, but stocks look like a one-way bet at the moment after record closes in the US yesterday.

USD is mixed today, lower against the euro and pound and losing its gains from the back end of Asian trading. Expectations are for another strong consumer sentiment reading, although solid data has not helped the greenback at all this week.

Market Thoughts – Dollar peak?

The buck has retraced nearly half of its gains of the year and the USDX is now sat on its 50-day moving average just above the mid-March lows at 91.31. The euro makes up over 50% of this index and we highlighted the cluster of resistance in EUR/USD around 1.1950/90 earlier in the week. Is the near-term high at 93.44 now in? The global recovery story needs an above-par Europe to sustain momentum so we will need to see the EU Recovery Fund make progress, along with a more successful vaccine rollout. Across the pond, as US market rates fall, so we may require more proof of a strong jobs market and a more enduring inflation hump.

The weekly closes are important but with volatility contained, risky assets and currencies are in vogue so expect further selling of the dollar to pressure the 91 support area next week. The 100-day moving average resides at 91.06.

Trade of the Day – AUD/JPY can push on to new highs

With data surprises continuing to be so positive, it’s no wonder that sentiment is buoyant, especially with all the stimulus sloshing around the global economy. Commodities are firmer and this is all helping the aussie as recovery optimism goes into overdrive. The extraordinary consumer sentiment figures out of Australia, with the index soaring to 11-year highs, further cement the positive outlook.

AUD/JPY is the classic risk on/risk off currency pair and has traded in an upward bullish channel since November. The pair is now bumping up against short-term resistance around 84.38/48, having bounced nicely off the 50-day SMA (simple moving average). Momentum indicators are picking up modestly, but if we can break the resistance above, the highs at 85.45 are in sight with few levels after this until the 88 area. Support lies around 83 to position stop losses.