Morning Brief
Global equity markets have started the trading week largely unchanged, although the Nikkei225 in Japan has started to rise as Japanese stocks have failed to react to heavy losses in Europe on Friday due to new COVID-19 lockdown.
Sentiment is also rising in broader markets on the back of speculation that the Japanese government and its oil reserves. If the market was to be flooded with reserves it would be negative for oil prices, and this is something we are already seeing this morning, with crude oil cracking the $76.00 support level.
The main news this morning is that German authorities are seriously considering “mandatory” COVID-19 vaccinations. Reports suggest there is a high chance of this coming to pass, and this move would follow the recent steps that the Austrian government have taken with mandatory vaccinations.
As expected, the US dollar currency has opened with a fresh bid-tone and continues to make strong traction against the euro currency and the British pound. Commodity currencies are also starting to weaken, with the Canadian dollar, New Zealand dollar, and Australian dollar gradually fading.
Precious metals are starting to rise, despite the US dollar holding firm. Gold and silver notably came under pressure on Friday, it will be interesting to see if the yellow metal comes back into favour with investors if the greenback keeps rising and inflations concerns improve.
Cryptocurrencies had a busy weekend and have opened up to the downside on Monday, with Bitcoin and Ethereum slipping. Bitcoin has strong support around $55,000 and $53,000 if the $57,000 support area cracks.
Day Ahead
There are a few things for traders to keep an eye on this week. The FOMC meeting minutes and the RBNZ rate decision are without a doubt going to be the main event that traders are going to focused on this week.
This week’s meeting minutes should give traders and insight into how those discussions about tapering went, and indeed it should give an insight into which policy members wanted to increase tapering at a faster rate.
Recent comments from some Federal Reserve officials would suggest that growing concerns is setting in about the pace of price rises. Any suggestion that a disagreement about the way forward for QE and rate hikes could rock markets.
The RBNZ rate decision could be one to watch this week. ANZ bank give a 60/40 chance that the New Zealand central bank will hike rates. With COVID-19 and growth concerns still high it may be too early for the central bank to hike rates; however, they are likely to sound hawkish, and that could be enough to lift the kiwi.
