Rising bond yields, especially in the United States, remain a key theme in the markets. Fed Chair Powell continued to ignore the issue this week and it has only made things worse. Equities and gold pulled back while USD gained. Story is likely to continue next week so be sure to watch EURUSD, US100 and GOLD!
EURUSD
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Create account Try a demo Download mobile app Download mobile appRising yields have boosted USD and pushed EURUSD to a 3-month lows this week. European bond yields halted advance at the end of the week after some ECB members took note of the issue. The ECB will announce its next monetary policy decision next week (Thursday, 12:45 pm GMT) and investors are eager to see whether words are followed by any actions. However, will it be enough for EUR to regain its shine?
US100
US tech index US100 has been one of the worst impacted equity benchmarks during this week's sell-off. Tech sector has been hit by overall deterioration in moods triggered by a yield spike as well as ongoing reflation trade with value outperforming growth stocks. US100 traded over 10% off the all-time high and dropped below 12,400 pts this week, the lowest level since mid-December 2020. The latest major correction on US100 (September 2020) pushed the price around 15% lower.
GOLD
Precious metals are also heavily impacted by rising yields. Negative correlation between gold prices and bond yields is well-known and has worked during the ongoing yield spike. Gold price dropped below $1,700 at the end of the this week and traders will focus on February's inflation data from the US (Wednesday, 1:30 pm GMT) for clues about what's next. Pick-up in the US inflation could exert pressure on precious metals.
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