Mixed sentiment as Dollar weakness supports markets

Frank Walbaum

Important news this week

Mon, 19th, 14.30 CET CA Consumer Price Index.
Wed, 21st, 08:00 CET UK Consumer Price Index.
Wed, 21st, 23:45 CET NZ Consumer Priice Index.
Fri, 23rd, various DE/EU/UK/US Purchasing Manager Index.

Mixed sentiment as Dollar weakness supports markets

Risk sentiment is improving at the start of the week, with markets attempting to recover from last week’s losses. The US dollar initially started higher but has since given back ground, with the DXY turning lower again from an important resistance area. Continued dollar weakness is helping support risk appetite, while AUDUSD is also starting the week on a stronger note. Cryptocurrencies are moving higher as buyers return, although the broader market picture remains mixed.
Metals are trading around important support levels, with gold showing greater strength. Meanwhile, attention is shifting towards the corporate earnings season and several important economic releases. Canadian inflation data are in focus today, with the results likely to influence expectations for the Bank of Canada and the direction of USD/CAD.

Market talk

The earnings season could become a major driver of market sentiment this week. Investors will be watching Netflix, Tesla, Meta Platforms, Procter & Gamble and 3M, among others. Results from major technology companies will be particularly important after recent concerns about the sustainability of the AI rally and the high cost of infrastructure investment. Strong results and positive outlooks could help restore confidence, but disappointing earnings or cautious guidance could trigger another wave of selling.
For the US dollar, the key technical question is whether the DXY can break through resistance or continue its downward turn. A sustained move lower could provide further support for risk-sensitive currencies and cryptocurrencies. However, the combination of earnings uncertainty and important economic data means that sentiment could change quickly. Gold’s ability to hold its support area will also be worth watching as investors balance renewed risk appetite against lingering uncertainty.

Tendencies in the markets

Equities positive, USD weak, crypto positive, oil positive, metals positive, JPY stronger.

Author

Frank Walbaum

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