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Global equities rebound
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US bond market halts 8-day run
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Employment data from Canada above estimates
Global markets made a rapid rebound following yesterday’s sell-off. Major European indices experienced their best day in weeks. The German DAX gained 1.73% and closed above 15,680 pts. The French CAC 40 gained 2.07%, which was the best result in four months. US indices bounced off as well and climbed to fresh record highs. Once again, a one-day turmoil on global stock markets was taken as an opportunity and traders rushed to “buy the dip”.
Risk assets are supported by rising bond yields - as a matter of fact an 8-day bond market rally was paused. Today’s headlines suggest that worries about spreading Covid-19 variant eased, but in reality the recent bid in the bond market might have been all about technicals, which eventually had a negative impact on equities yesterday.
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Create account Try a demo Download mobile app Download mobile appA set of economic data from the United Kingdom, which was released in the morning, turned out to be a disappointment. Industrial production, manufacturing production and GDP figures came in below forecasts. However, Canada’s employment topped estimates (230.7k vs exp. 170k). The Fed released its semi-annual monetary policy report - the central bank still considers inflation temporary, but at the same time sees upside risks to the inflation outlook in the near term.
Oil and copper prices move higher amid today’s broad risk-on mood. The US dollar is weakening against most major currencies, with the exception of the JPY. The CAD also gained after strong headline employment number from Canada, which was mentioned above.
Even though Monday will not bring us key economic reports, the US earnings season kicks off after the weekend - meaning that the next week will certainly be interesting and extremely vibrant!
AUDUSD fell below the neckline of the head and shoulders pattern yesterday amid a broad-based sell-off. However, the US dollar is weakening against most major currencies today and AUDUSD reached the mentioned neckline again - an engulfing pattern could potentially be painted on the daily chart, which in theory would herald further gains. In such scenario, the area at 0.7580 may be the next key resistance. Source: xStation5
